From the course: Financial Forecasting with Analytics Essential Training
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Conventional financial forecasting - Microsoft Excel Tutorial
From the course: Financial Forecasting with Analytics Essential Training
Conventional financial forecasting
- [Instructor] Now that you have a handle on the basics of financial statements and how they work for a business, let's take a look at how practical financial forecasting works on a basic level. I'm in the 01_03_Begin Excel sheet. Now what we have here is a very simple income statement along with a basic balance sheet consisting of our asset section and our liabilities and equity section. So what we could do is go through and try to do some sort of a basic forecast going forward. How does this work in practice? Well, conventional financial forecasting revolves around making certain assumptions about key variables for the business. For example, if we have 2021 actual sales of $200,000, we might assume 6% sales growth, and then we get, based on that, 2022 sales of $212,000. We could then take this formula and apply it out, say over a five-year period, and we see how sales growth evolves over time. Now if you're saying to…
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