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Page 67
How To Investigate Any Business Opportunity
13. If cyclical changes have any effect on this kind of business, what is the nature of the fluctua-
tions?
·
How often do they occur? 
·
With what intensity?
14. Have sales of this business in the past tended to show the effect of these cyclical fluctua-
tions? To what extent? Intensity?
Knowing the effect of cyclical changes on the business may give some idea of what can be expected
from the standpoint of intermediate-range planning and forecasting.
15. If the business is influenced by cyclical fluctuations, at what stage is the cycle at the time of
the study?
Cyclical fluctuations may be the result of broad-scale economic circumstances, but the intermediate ef-
fect on a given business may not be in proportion to normal economic indicators.
16. What is the ratio of operating expenses to sales in the most recent operating statement?
A comparison of these costs with ratios or averages of similar businesses should give an indication of
the operating efficiency.
l7. Which has been the year-to-year and average ratio of operating expenses to sales for past
years?
Have operating expenses tended to increase, decrease, or remain about the same in relation to sales?
Has the relative change in operating expenses been about equal to, greater than, or less than the rela-
tive change in sales?
On a cumulative basis, what has been the change in the pattern of operating expenses over the past
years?
18. Are selling costs (sales, salaries, advertising, delivery) increasing, decreasing, or remaining
the same in relation to sales?
If selling costs are increasing faster than sales, each dollar spent on selling effort is bringing in a smaller
return. This information may suggest possible ways of increasing the efficiency of the company's sales
effort,
19. What is the ratio of net sales to gross sales and what has been the trend of this ratio over the
past years?
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