Principles of Finance · free preview
Forecasting Sales
Sales forecasts combine trend extrapolation, market analysis, and econometric models, with each method pricing a different information source, and the disciplined forecast triangulates across methods rather than trusting one.
1. The trend approach
The trend approach
2. The market approach
The market approach
3. The econometric approach
The econometric approach
4. Triangulating the forecast
Triangulating the forecast
5. The trend's assumption
What assumption underlies the trend extrapolation method of sales forecasting?
6. The market approach's inputs
How is a market-based sales forecast constructed?
7. The econometric advantage
What does the econometric approach to sales forecasting add that the other methods lack?
8. Triangulation's purpose
Why does disciplined practice triangulate across trend, market, and econometric methods?
9. The young firm's method
Which sales forecasting method is the only workable one for a young firm without meaningful sales history?
10. Documenting the drivers
Why should a sales forecast document its named drivers and assumptions?
11. The naive benchmark
What does the trend extrapolation serve as for businesses where better information exists? Answer with two words.
12. The outside-in construction
What two-word term names the market approach's construction of sales from industry size and share? Answer in lowercase.
13. The driver model's statistic
What two-word statistic reports how much of sales variation an econometric model explains? Answer in lowercase.
14. The disagreement's meaning
In triangulation, the spread between methods is treated not as failure but as what quantity? Answer with two words.
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