From the course: Financial Analysis: Making Business Projections

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Finding balance between the two approaches

Finding balance between the two approaches - Microsoft Excel Tutorial

From the course: Financial Analysis: Making Business Projections

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Finding balance between the two approaches

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- [Voiceover] We have now completed learning about the top-down and bottom-up approaches to preparing a financial projection for your business. As we discussed, at multiple occasions, each of those methodologies, taken separately, only provide part of a balanced answer to preparing a realistic scenario of what to expect for the coming year. The bottom-up approach is, of course, much more robust and detailed and is kept in check by the top-down approach, which stays true to the big picture. The realistic view is somewhere in between. The only thing left for us to do is to calculate the midpoint as a third scenario, which would be the average between the top-down and bottom-up approach. To do so, we simply need to calculate the mathematical average of our revenue, gross margin, and objects.

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