Join Rudolph Rosenberg for an in-depth discussion in this video Volatility and the treatment of exceptional elements, part of Financial Analysis: Making Business Projections.
- When preparing a financial projection you will…bump into two kinds of business elements.…The ones that are stable and therefore easily predictable,…and the ones that occur less often and for which it is…more difficult to note when they will happen.…In other terms, those business elements can be…categorized based on their level of uncertainty,…which is also called volatility.…As you have probably guessed already, the more…predictable things are better for our financial projection,…because we know what will happen and when.…
For example, we know you and I are going to need a salary…next month, so wages in general are very predictable,…and as long as we know who is employed in the company,…we know that we will have an expense every month for their salary…On the other hand, some business…activities are much less certain.…For example, what is the probability of your company…signing a contract that is ten times…the size of your usual business?…Probably very low because if it weren't,…it would be a part of your usual business,…
Author
Rudolph Rosenberg
Released
9/9/2014- Distinguish between forecasting and planning.
- Recall the pros and cons of bottom-up projection.
- Explain how a finance manager can utilize a sales pipeline in business projections.
- Describe how a company can forecast its gross margin by product.
- Identify the pros and cons of using top-down projection.
- Recognize how business plans utilize forecasts.
- Summarize how to develop a set of worst-case scenarios.
Skill Level Intermediate
Duration
Views
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Introduction
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Welcome42s
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1. Financial Projection Basics
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Financial projections1m 34s
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2. Estimating Volumes, Price, and Revenue
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Revenue projection basics1m 46s
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Preparing past P&Ls3m 40s
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Market-driven forecasting2m 46s
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3. Estimating Cost of Production and Margin
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4. Estimating Operating Expenses
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Projecting fixed OPEX1m 55s
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Projecting variable OPEX1m 41s
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5. The Top-Down Approach
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The exit methodology2m 15s
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6. Setting Up Targets
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Moving from forecast to plan2m 10s
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Conclusion
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Next steps1m 10s
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Video: Volatility and the treatment of exceptional elements