1
Revenue Forecast
FIN/575
, 2
Revenue Forecast
Revenue forecasting is a necessity for a business whether new or old this tool can help a
business to budget business expenses so that they can have a better understanding of what they
can and cannot afford throughout the year. The forecast is a prediction for what the company is
expected to bring in. This will give an insight into what they can spend and what their profit
margin will be (Wood, 2020). This paper will explain the uses for each of the three
classifications of ratios; liquidity, solvency, and profitability. Next, this paper will calculate the
current ratio, profit margin, and after-tax ROE for Amazon, and then compare these with the
ratios to the financial statements and ratios to Lifetouch Inc.
Forecasting
Most businesses in their early start-up, will produce a business plan, along with this
business plan there needs to be a forecast included that investors and banks would like to see.
Revenue forecasting is something that most companies include. Revenue forecasting can be
either a judgment forecast or a quantitative forecast. A judgment forecast is where a company
will use its own experiences and perception as a business owner to lay out the pattern for the
company's income and expenses for the year (Wood, 2020). Quantitative forecasting is where the
company will use a scientific method to predict the expectations of the company’s expenses and
income by using the past revenue data of either their own company or the data of other
companies within the same market (Wood, 2020). Efficiently managing the company's cash flow
can be the difference from maintainable or downfall in business and like your business plan, the
revenue forecast should also be revisited to update any changes to the expenses or cash flow into
the company (Hipshman & Campbell, 2010).
Ratio Classification
Revenue Forecast
FIN/575
, 2
Revenue Forecast
Revenue forecasting is a necessity for a business whether new or old this tool can help a
business to budget business expenses so that they can have a better understanding of what they
can and cannot afford throughout the year. The forecast is a prediction for what the company is
expected to bring in. This will give an insight into what they can spend and what their profit
margin will be (Wood, 2020). This paper will explain the uses for each of the three
classifications of ratios; liquidity, solvency, and profitability. Next, this paper will calculate the
current ratio, profit margin, and after-tax ROE for Amazon, and then compare these with the
ratios to the financial statements and ratios to Lifetouch Inc.
Forecasting
Most businesses in their early start-up, will produce a business plan, along with this
business plan there needs to be a forecast included that investors and banks would like to see.
Revenue forecasting is something that most companies include. Revenue forecasting can be
either a judgment forecast or a quantitative forecast. A judgment forecast is where a company
will use its own experiences and perception as a business owner to lay out the pattern for the
company's income and expenses for the year (Wood, 2020). Quantitative forecasting is where the
company will use a scientific method to predict the expectations of the company’s expenses and
income by using the past revenue data of either their own company or the data of other
companies within the same market (Wood, 2020). Efficiently managing the company's cash flow
can be the difference from maintainable or downfall in business and like your business plan, the
revenue forecast should also be revisited to update any changes to the expenses or cash flow into
the company (Hipshman & Campbell, 2010).
Ratio Classification
