Unformatted text preview: as the last 5 years so we decided to adjust the historical growth rate down and get the growth rate for the next five years at 7%. Sales revenue growth after the forecast period: After the forecast period, the growth rate is expected to fall to 4.5% in line with the nominal growth rate of the economy, based upon a prediction of 2.5% potential real growth in GDP and 2% inflation. Tax rate: The historical effective tax rate of BBBY was around 37%. We believed that this would be the same over the forecasted period. Therefore, tax rate of 37% is applied to the analysis. Cost of goods sold over sales: We believed that the percentage of cost of goods sold over sales would remain at 60% throughout the forecasted period which is slightly higher than the last year. Sellinggeneral and administrative expense over sales: We believed that the percentage of selling general and administrative expense over sales would remain at 30% throughout the forecasted period. .....
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This note was uploaded on 11/15/2010 for the course ADM ddd22333 taught by Professor Carlos during the Spring '10 term at Unimep.
- Spring '10