Dabbiie (2) - Assumption for CostCo Sales Growth The sale...

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Assumption for CostCo Sales Growth – The sale growth has been assumed at slightly higher than the 2010 sales growth considering the acquisition of PriceSmart and access to new markets, customers and cross selling of products. Therefore we have assumed sales growth of 10-11% in the first 3 years as compared to sales growth of 9% during FY10 over FY09. The sales growth has been increase by 1-2% in the first three years from the historical growth rate, considering the new market and access to new customers. We think that the company will be able to generate higher sale due to the merger and its ability to scale up the operations, better visibility in the market, logistic and new products. Gross Profit – The ratio has been increased by almost 4% considering the synergies expected out of the acquisition and increase in scale of operations. With the increase in scale of operations, the fixed expenses doesn’t increase in the same proportion and also there will be synergies in terms of warehousing expense and shipping expense, considering the usage of PriceSmart
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This note was uploaded on 12/04/2011 for the course ECONOMICS 201 taught by Professor Rcollier during the Spring '10 term at Portland CC.

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Dabbiie (2) - Assumption for CostCo Sales Growth The sale...

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