From the course: Business Financials Explained

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Advantages and disadvantages of top-down vs. bottom-up financials

Advantages and disadvantages of top-down vs. bottom-up financials

From the course: Business Financials Explained

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Advantages and disadvantages of top-down vs. bottom-up financials

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- So I want to cover with you just a couple of advantages and disadvantages of using each one of these approaches, so you can get a little bit more familiar with them. There's nothing wrong with either one. You can use both of them. Of course, I actually do like the bottom up approach, because it's very justified, but not in every case can you actually use it. So let me give you some advantages and disadvantages. First of all, the advantage of the top down approach is it gives you a broad view of your revenue potential. It's simpler and it's more streamlined. It's going to be quicker to actually do. It's great for doing a feasibility analysis, as well, because you can do it very quickly. Generally, it's more optimistic, which I like because I'm optimistic, so you might like that, too. And you can generate a model. When you have lots of individual products to forecast, it's actually a little bit easier to do that. There are…

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