1. Because the hybrid method of financial forecasting is used, the cost of goods sold as a percent of sales should be addressed in your analysis. For example, the COS % of Sales is 42% in 1999, 39.7% in 2000, 39.8% in 2001, and you need to provide a forecast for 2002 - 2004. The COS % of Sales in the 3 year forecast should never go above 42% because of the current market conditions, and at best should increase to 41% in 2004. To be conservative, the 2002 and 2003 %s should average 40.25%. (Another way to handle this is to do a sensitivity analysis; say the % was 35 for all 3 years, then do it again at 37, 40, 42 and 45 and show how this impacts the bottom line. Then choose the best estimate)