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Techniques for Successful Forecasting Essay Example

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Techniques for Successful Forecasting

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Techniques for Successful Forecasting. In this method of analysis and forecasting, the expected costs and returns associated with any project are analyzed in order to evaluate the benefits of any investment (Kent, 2011). This method is mostly used by the organization in order to take decisions about the investments in different projects (Lee, Lee, & Lee, 2009). Capital budgeting analysis uses the cash inflows and outflows with respect to their time periods in order to evaluate the total worth of any project. There mostly used methods in this regard are of (Drake & Kerrigan):Both methods i. pro forma budget analysis and capital budget analysis have their own benefits and limitations (Marino & Matsusaka, 2004). The best way is to use both methods according to the requirements and needs of the forecasting process.

How would you keep your company’s forecast updated and current? What would be the length of time for your forecast, and what role will benchmarks play in determining the success or failure of your forecast?In order to keep the forecast updated and current, the process of forecasting should be ongoing and should not be limited to be done on annual basis. There are ongoing changes and advancements in the industry and market which should be incorporated in the process of forecasting (Drake & Kerrigan). This requires a continuous process of forecasting, which includes modifying the assumptions and incorporating the impact of different changing factors on the financial position of the organization in the long run. The time frame for the forecasting process should be short term plus long term. Benchmarking against the actual sales allows to determine whether the forecasting was successful or not (Morlidge & Player, 2010).Discuss in some detail your view of the impact of either inflation or deflation on a company’s forecast for sales in the next 5 years. Explain how you think an “average” company will be impacted by either, what they should do to prepare for this occurrence, and what you would do if you were this “average” company’s CEO.Inflation or deflation can have direct impact on the forecast for sales in the next five years. Inflation can result in increasing the cost of production of the company along with several other implications which can reduce the overall profitability of the company (Morlidge & Player, 2010). At the same time, inflation can. Techniques for Successful Forecasting.

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References

Bergheim, S. (2008). Long run Growth Forecasting. Heidelberg, Germany: Springer-Verlag Berlin Heidelberg.

Drake, G,. & Kerrigan, M. Techniques for successful forecasting. Microsoft, Retrieved from <http://office.microsoft.com/en-us/access-help/techniques-for-successful-forecasting-HA001138962.aspx>

Eickmeier, S., & Ziegler, C. (2008). ‘How Successful are Dynamic Factor Models at Forecasting Output and Inflation? A meta-analytic approach.’ Journal of Forecasting, 27(3), 237-265.

Gately, E. (1998). Forecasting Profits using Price and Time. New York: John Wiley & Sons, Inc.

Helfert, E. (2004). Techniques of Financial Analysis: A practical guide to managing and measuring business performance. New Delhi: Tata McGraw-Hill.

Kent, B., & English, P. (2011). Capital Budgeting Valuation: Financial Analysis for Today’s Investment Projects. Hoboken: John Wiley & Sons.

Lee, A., Lee, J, & Lee, C. (2009). Financial Analysis, Planning, and Forecasting: theory and application. Singapore: World Scientific Publishing Co. Pte. Ltd.

Marino, A., & Matsusaka, J. (2004). ‘Decision Processes, Agency Problems, and Information: An economic analysis of capital budgeting procedures.’ Review of Financial Studies, 18(1): 301-325.

Morlidge, S., & Player, S. (2010). Future Ready: how to master business forecasting. West Sussex, UK: John Wiley & Sons Ltd.

Saffo, P. (2007). ‘Six Rules for Effective Forecasting.’ Harvard Business Review, July-August, Retrieved February 5, 2012, from <http://www.usc.edu/schools/annenberg/asc/projects/wkc/pdf/200912digitalleadership_saffo.pdf>

Shim, J. (2000). Strategic Business Forecasting: the complete guide to forecasting real world company performance. New York: St. Lucie Press

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