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Financial forecasting: Examining the basic model


This course will introduce you to the financial forecasting process, beginning with the sales forecast, continuing with the projected income statement and balance sheet, and concluding with use of the financial forecasts for decision-making purposes. It explains the basic forecasting model and illustrates how the percent-of-sales method is used to prepare the projected income statement and balance sheet.

Learning Objectives:

  • Explain the purpose of forecasting to nonfinancial executives in your company
  • Determine what ‘basic’ assumptions are necessary in preparing the first-past forecast
  • Compute the external funds needed (EFN) requirements for a company using the percent of sales method to prepare a sources and uses of cash equation
  • Determine when an asset or liability is spontaneous
  • Prepare the first-pass forecasted balance sheet

Also see the other courses in this series: Financial forecasting: The Financial Statements; Financial forecasting: Planning and decision making; and Financial forecasting: Managing growth.