Financial plans always entail alternative sets of assumptions. The financial-planning process might require each division to prepare alternative business plans.
a) A worst case. This plan would require making the worst possible assumptions about the company’s products and the state of the economy. It could mean divestiture and liquidation.
b) A normal case. This plan would require making the most likely assumptions about the company and the economy.
c) A best case. Each division would be required to work out a case based on the most optimistic assumptions. Is could involve new products and expansion.
