You started a winery in L.A. County in 2014. Your winery is a corporation. You are CEO, CFO and COO. You sell your wine to wholesale distributors throughout the U.S.
You have to:
1.Read Ross et al. (Essentials of Corporate Finance, 10th edition) pp. 293-297 (ATTACHED PDF). You need to understand how to do scenario analysis and sensitivity analysis.
2. *Do the regression with numbers provided in Excel PDF* You will have historical data that have one number changed (and all other numbers remain the same). This is your “base case.” You have to explain the results in your report.
3.In addition to your base case, you have to conduct the scenario analysis and/or the sensitivity analysis (Read Ross Book PDF). These analyses are to capture the magnitude of deviations in 2022 operation results from your base case. These deviations arise from the assumption of more deadly new COVID variants in 2022. If these variants emerge, how does your base case change? The scenario and/or sensitivity analysis answers this question. Remember that you have to do this analysis (or analyses) to answer your shareholders’ concern about your 2022 winery operations if COVID hits again in 2022. You have to do a little research on the impact of COVID on the wine industry. Here is a link on COVID impact on Wine Industry that you can use: https://www.thedrinksbusiness.com/2020/12/covid-19… The more evidence-based your analysis (analyses) is, the better. The more realistic your analysis (analyses) is, the better. You have to show your references in your report. **** CHOOSE METHOD #2 FOR SCENARIO ANALYSIS & PROFIT GRAPH. THIS ON PG. 6 IN WINERY PROJECT WORK EXPLANATION SHEET
In conducting the scenario and/or sensitivity analysis, use the pro forma income statement. When you explain the analysis results, you have to show a summary table or tables (in the main text) and these pro forma income statements (in the appendix). ****LOOK AT PAGE 7 IN WINERY PROJECT WORK EXPLANATION PDF.
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