Question

From below listed issues, which do you consider is the most damaging one to potential businesses?...

From below listed issues, which do you consider is the most damaging one to potential businesses? Justify your answer.

Not understanding the revenue drivers,

Underestimating costs..

Underestimating time to generate revenues,

Lack of comparables,

Top-down versus bottom-up forecasting,

Time to secure financing.

Homework Answers

Answer #1

Option, Underestimating costs

Reason: Underestimating costs has serious impacts on the company's prospects since costs are crucial in determining profitability and selling prices to decide on revenues. It is important to control costs to avoid buying sutff they don't need, making products that they should not sell and misallocate capital resulting in efficiency. Costing is also important in inventory valuation, allocation of resources and improve efficiency.

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