Case_In_Point_7th_Edition_Page001_183_2

I’m going to do part of this through a process of elimination. Everyone below Company F
growing at a smaller or equal rate or whose revenues are significantly below ours can be
eliminated. So that’s easily the bottom four — I through L.
We also know that A and B will remain the top two. So I need to concentrate on C through H,
including us — F. So, first, I’m going to do the calculations for each of those and see where
they stand.
If we stayed at a 10% growth rate we’d have revenues of $726 million, which would put us in
seventh place. So, how fast do we need to grow? If we round Company E’s sales off to $772
then that’s our target number. We need to beat 772. So we need an increase of over $46 million
(772 - 726). So 660X = 772. Divide each side by 660 and we get X equals ... about 1.17 or 17%. A
minimum 17% growth in Y3 would put us in sixth place.
– Okay, good. Which company would you invest in and why?