CH.6 PROSPECTIVE ANALYSIS: FORECASTING. The Techniques of Forecasting The Overall Structure of...

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CH.6 PROSPECTIVE ANALYSIS: FORECASTING

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The Techniques of Forecasting (Cont’d) Getting started: Points of Departure Last year performance, last year performance adjusted with recent trends, average performance over several prior years The behavior of sales growth: mean reverting The behavior of earnings: random walk The behavior of ROE: mean reverting The behavior of components of ROE Operating asset turnover, net financial leverage: stable NOPAT margin and spread: most variable

Transcript of CH.6 PROSPECTIVE ANALYSIS: FORECASTING. The Techniques of Forecasting The Overall Structure of...

Page 1: CH.6 PROSPECTIVE ANALYSIS: FORECASTING. The Techniques of Forecasting The Overall Structure of Forecasts Do it comprehensively Involve many forecasts.

CH.6PROSPECTIVE ANALYSIS:

FORECASTING

Page 2: CH.6 PROSPECTIVE ANALYSIS: FORECASTING. The Techniques of Forecasting The Overall Structure of Forecasts Do it comprehensively Involve many forecasts.

The Techniques of Forecasting• The Overall Structure of Forecasts

• Do it comprehensively• Involve many forecasts• Key “drivers”: sales, profit margin

• Focus on projecting “condensed” financial statements

Page 3: CH.6 PROSPECTIVE ANALYSIS: FORECASTING. The Techniques of Forecasting The Overall Structure of Forecasts Do it comprehensively Involve many forecasts.

The Techniques of Forecasting (Cont’d)• Getting started: Points of Departure

• Last year performance, last year performance adjusted with recent trends, average performance over several prior years

• The behavior of sales growth: mean reverting

• The behavior of earnings: random walk• The behavior of ROE: mean reverting• The behavior of components of ROE

• Operating asset turnover, net financial leverage: stable

• NOPAT margin and spread: most variable

Page 4: CH.6 PROSPECTIVE ANALYSIS: FORECASTING. The Techniques of Forecasting The Overall Structure of Forecasts Do it comprehensively Involve many forecasts.

Making Forecasts• Table 6-1: forecasting assumptions• Table 6-2: forecasted income

statements and balance sheet

Page 5: CH.6 PROSPECTIVE ANALYSIS: FORECASTING. The Techniques of Forecasting The Overall Structure of Forecasts Do it comprehensively Involve many forecasts.

Sensitivity Analysis• Seasonality and Interim Forecasts

• Can not focus only on performance of the most recent quarter, but also the performance of the comparable quarter of the prior year


Econometric Forecasts Package: Short-Run Forecasting Models for

Econometric Forecasts Package: Short-Run Forecasting Models for

THE FUTURE OF FORECASTS: IMPACT-BASED FORECASTING

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Ridership Forecasting Technical Memorandum - … · Ridership Forecasting Technical Memorandum December 8th, 2017 Forecasting Methodology The ridership forecasts for various Systems

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Forecasting February 26, 2007. Laws of Forecasting Three Laws of Forecasting –Forecasts are always wrong! –Detailed forecasts are worse than aggregate.

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Introduction to Forecasting COB 291 Spring 2000. Forecasting 4 A forecast is an estimate of future demand 4 Forecasts contain error 4 Forecasts can be.

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Measuringthebehaviourofexpertsondemand forecasting ......judgemental forecasting in the presence of promotions, being one of the main reasons to judgementally adjust forecasts, and

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Forecasting of Demandeclt5940/protected/Forecasting-S.pdf · Forecasting v.s. Planning • When sales dept. shows sales forecasts, be cautious. They may be goals • Both forecasting

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Forecasting & Replenishment with IBM DIOS DIOS Demand Forecasting How DIOS calculates demand forecasts: – Uses the outbound transactional data – Supports all common forecasting

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