**1. Introduction**

#### **1.1 The life cycle in business**

The valuation of the shareholders' equity is made from the projection of company profits (income minus costs) or cash flows (income minus expenses). The construction of these statements and economic flows means that each of its components must be projected, for which assumptions are made about the evolution of the company's fundamentals (prices, sales volume, costs and expenses). The projections of each variable are not independent, since they are carried out taking as a point of reference the projection of sales or income of the company. Based on this projection, those corresponding to costs and expenses are made, including projections of investments in assets and working capital.

From this process, the importance of the way in which sales evolve is clear; In this sense, it is important to analyze the concept of the business life cycle, since it describes the evolution of sales since the beginning of the company's operations. The first sales with Chart with the product *introduction stage*; if the company's products reach market acceptance, the *growth stage begins*; When sales are consolidated in the target

**Figure 1.** *Development of the business over time. Source: Prepared by the author.*

market and the sales growth rate decreases, it is known that the company has entered the *maturity stage*. This can be seen in **Figure 1**, which corresponds to the development of the business over time, which since its introduction has seen sales grow with an S-shaped trend line inclined forward.
