From the course: Financial Modeling and Forecasting Financial Statements
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Combine historical trends with current plans
From the course: Financial Modeling and Forecasting Financial Statements
Combine historical trends with current plans
- Creating an accurate sales forecast is a topic all on its own. This requires a good market and economic analysis, a good understanding of the expected impact of the marketing plan, intelligence about what the competitors expect you to do, and being familiar with time series statistical forecasting models. (chuckles) Hey, I'm a simple accountant, so the best I can do for you in this course is to make you aware of a few factors that should be remembered when creating a sales forecast. Three of those factors are: first, historical trend, second, the impact of current plans, and third, a change in the competitive environment. Let's work with a simple numerical example. Spencer Company had sales last year of $1000. For the past five years, Spencer has done business out of 10 store locations. The average overall sales growth rate has been 8% per year. This is very good performance because this means that the same store…
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