In this textbook chapter 14, There are about forecasting financial variable...can you explain the note below about forecasting financial variable... Does it mean forecasting financial have few variables? If yes list out the variable of forecasting financial. About the method below....is there another method can use? If yes list out the type of method can use. DO Financial Forecasting LO 14.1 Use the percent of sales method to forecast the financing requirements of a firm Financial forecasting is the process of attempting to estimate a firm's future financing requirements. The basic steps involved in predicting those financing needs are the following: Forecasting Financial Variables Do STEP 1 Project the firm's sales revenues and expenses over the planning period STEP 2 Estimate the levels of investment in current and fixed assets that are needed to support the projected sales forecast STEP 3 Determine the firm's financing speeds throughout the planning period that are required to fund its assets. Traditional financial forecasting takes the sales forecast as a given and projects its impact on the firm's various expenses, assets, and liabilities. The most commonly used method for making these projections is the percent of sales method. The Sales Forecast The key ingredient in the firm's planning process is the sales forecast. This projection is generally derived using information from a number of sources. At a minimum, the sales forecast for the coming year reflects (1) any past trend in sales that is expected to carry through into the new year and (2) the influence of any anticipated events that might materially affect that trend. An example of the second source is the initiation of a major advertising campaign or a change in the firm's pricing policy. DDY GLOBAL EDITION Foundations of Finance The Logic and Practice of Financial Management TENTH EDITION Arthur J. Keown John D. Martin J. William Petty In this textbook chapter 14, There are about forecasting financial variable...can you explain the note below about forecasting financial variable... Does it mean forecasting financial have few variables? If yes list out the variable of forecasting financial. About the method below....is there another method can use? If yes list out the type of method can use. DO Financial Forecasting LO 14.1 Use the percent of sales method to forecast the financing requirements of a firm Financial forecasting is the process of attempting to estimate a firm's future financing requirements. The basic steps involved in predicting those financing needs are the following: Forecasting Financial Variables Do STEP 1 Project the firm's sales revenues and expenses over the planning period STEP 2 Estimate the levels of investment in current and fixed assets that are needed to support the projected sales forecast STEP 3 Determine the firm's financing speeds throughout the planning period that are required to fund its assets. Traditional financial forecasting takes the sales forecast as a given and projects its impact on the firm's various expenses, assets, and liabilities. The most commonly used method for making these projections is the percent of sales method. The Sales Forecast The key ingredient in the firm's planning process is the sales forecast. This projection is generally derived using information from a number of sources. At a minimum, the sales forecast for the coming year reflects (1) any past trend in sales that is expected to carry through into the new year and (2) the influence of any anticipated events that might materially affect that trend. An example of the second source is the initiation of a major advertising campaign or a change in the firm's pricing policy. DDY GLOBAL EDITION Foundations of Finance The Logic and Practice of Financial Management TENTH EDITION Arthur J. Keown John D. Martin J. William Petty
