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So, now we're going to cover step two.
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We're creating the three scenarios for each of our operating statistics,
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because eventually these will feed into the forecast above.
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We've created row for each of
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these three scenarios and the actual numbers are based on historical data,
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which we know as here,
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knowledge of the business autonomous,
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research, and assumptions about the business itself.
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You would be asking questions like,
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do you expect the revenue growth to stay the same or increase?
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If so, by how much?
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Let's walk through each of these,
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base case is the status quo.
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So, we can plug this in.
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So, the average growth was minus six percent.
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So, you can see that in year two the revenues were lower than year one,
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and then they were even further lower in year three.
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So, this company isn't doing well.
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So, the revenue growth was minus six percent off of year one,
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and minus four percent off of year two.
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So, the base case is to just keep the status quo and keep it an average of minus five.
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The strong case is that you actually reduce this decline and you say,
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okay it's going to be minus three.
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The weak case is where it becomes worse.
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So, just for simplicity reason,
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just kept this as minus seven to just show you.
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For gross margin, we can see that the gross margin,
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we can see has been 0.28 to 0.29.
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So, I'm going to keep this as the base case and then prove it by a percentage 0.02 here.
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Then, the weak case would be where it declined a little bit.
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Again, this will be based on more about the assumptions about
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the company and having a better business knowledge about the company itself.
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Then finally for operating margin,
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it was 0.07 through 0.05,
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it ranged in that.
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So, I'm going to keep it at an average of base cases 0.06,
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strongest 0.08 and 0.09,
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and then weak cases 0.07 and we'll just keep it there.
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So, we have our scenarios mapped out now and we get to step three.
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I'm just going to pause here and we can watch the next step in the next video.
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