Sensitivity Analysis and Assumptions for group project

Sensitivity Analysis and Assumptions for group project -...

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Sensitivity Analysis: This company falls into the services sector of the economy (70% of economy) A good way to predict revenue growth would be to look at GDP growth 3% GDP growth in 2010 (Bays rented 40%) o Consumers less likely to utilize this service in favor of full-service mechanic o Will still have car enthusiast crowd o Revenues won’t drop that much -2.5% GDP growth in 2010 (Bays rented 70%) o Consumers more likely to seek savings by fixing their cars themselves Should GDP growth affect revenues, we will not want to expand in year 4  Assumptions: Weather is fairly consistent in California . Unlike other regions, revenues won’t be  affected by the seasons and should see consistent growth throughout the year.  Revenue growth is typically 4% a month for a new auto repair shop . This leads us  to believe that because this is a new service, revenues will grow half as fast, or at 2% a 
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