1. An analyst is forecasting gross profit of the three following companies. He uses the five-year average gross margins and forecasts sales using an internal model.
·Company 1's products currently enjoy healthy margins because of its technological edge. New technologies typically replace old ones every two years in this industry.
·Company 2 has been offering the same products throughout the period, and the demand and cost structures for its products have not experienced any significant changes.
·Company 3 has recently restructured its product offerings focusing on high margin products only.
For which of the three companies will the forecast of gross profit be most reliable? Company: