From the course: Financial Analysis: Making Business Projections

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Preparing past P&Ls

Preparing past P&Ls - Microsoft Excel Tutorial

From the course: Financial Analysis: Making Business Projections

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Preparing past P&Ls

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- The first preparation we need to do, as hinted in our introductory chapter, is to break down our P&L into two categories based on the volatility of our business. The reason why we want to break down our past P&L is that we will be using two different methodologies to forecast our past P&L depending on if that element is a day-to-day factor and therefore more stable and predictable, or if it's an exceptional one. You might want to ask why day-to-day business is supposed to be more predictable, after all, you don't always know when the next customer is going to come in. In many times, new customers look nothing like the previous ones and could have very different needs. So, how can we say that day-to-day business is so stable and predictable? To answer that question, we need to step back a bit from those thoughts on the profile and needs of our customers. Every business has tens, hundreds, or thousands of customers that all look different and have different needs. Nevertheless, every…

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