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© Copyright 2002-2003. All rights reserved.
Page 65
How To Investigate Any Business Opportunity
Converting the dollar figures to yearly percent of change and plotting them on a graph makes them eas-
ier to interpret.
2. Using a given year in the past as a base, what has been the cumulative rate of change up to
the present?
Again, plotting the figures on a graph helps to visualize the changes.
3. What has been the percent of change in sales, year-to-year and cumulative, for this kind of
business on a national or other basis?
The years should be comparable to those used in questions 1 and 2 so that the pattern of change for the
company can be compared with that for like businesses.
4. How much of the increase or decrease in sales can be attributed to increasing or decreasing
prices and how much to real sales?
The fact that sales have shown an increase may lead to a false conclusion that the company has shown
good growth. In some types of businesses, merchandise costs have increased rapidly. An average in-
crease of 2 percent per year in sales over 5 years changes in significance when it is known that prices
have increased 8 percent during the same period. Consumer and wholesale price indexes should be
checked, as well as other factors that may indicate rising prices.
5. Have prices in this company increased more rapidly, less rapidly, or at about the same rate as
those in this kind of business generally?
It is important to know how the business compares in this respect with similar firms. If it is out of line,
what is the reason?
6. Over a period of years, what has been the change in the level of sales for this business as
compared to all businesses of this type? Are sales-
·
Increasing percentage-wise more than normal?
·
Increasing at about the same rate?
·
Increasing less than normal?
·
Showing no increase at all?
·
Decreasing less than normal if like businesses are decreasing?
·
Decreasing at about the same rate?
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