Original subtitles

So, now we're going to cover step two.

We're creating the three scenarios for each of our operating statistics,

because eventually these will feed into the forecast above.

We've created row for each of

these three scenarios and the actual numbers are based on historical data,

which we know as here,

knowledge of the business autonomous,

research, and assumptions about the business itself.

You would be asking questions like,

do you expect the revenue growth to stay the same or increase?

If so, by how much?

Let's walk through each of these,

base case is the status quo.

So, we can plug this in.

So, the average growth was minus six percent.

So, you can see that in year two the revenues were lower than year one,

and then they were even further lower in year three.

So, this company isn't doing well.

So, the revenue growth was minus six percent off of year one,

and minus four percent off of year two.

So, the base case is to just keep the status quo and keep it an average of minus five.

The strong case is that you actually reduce this decline and you say,

okay it's going to be minus three.

The weak case is where it becomes worse.

So, just for simplicity reason,

just kept this as minus seven to just show you.

For gross margin, we can see that the gross margin,

we can see has been 0.28 to 0.29.

So, I'm going to keep this as the base case and then prove it by a percentage 0.02 here.

Then, the weak case would be where it declined a little bit.

Again, this will be based on more about the assumptions about

the company and having a better business knowledge about the company itself.

Then finally for operating margin,

it was 0.07 through 0.05,

it ranged in that.

So, I'm going to keep it at an average of base cases 0.06,

strongest 0.08 and 0.09,

and then weak cases 0.07 and we'll just keep it there.

So, we have our scenarios mapped out now and we get to step three.

I'm just going to pause here and we can watch the next step in the next video.