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Mastering Cash Flow and Valuation Modelling by Alastair Day

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5

Sales forecast

Forecasting objectives

Method

Sales

Common size analysis

Forecast sheet

Summary

FORECASTING OBJECTIVES

With the historic statements in place, the model needs to generate expectations of future performance and provide forecasted statements and cash flows. Forecasting is not a precise science and models should allow the user to analyse different economic and strategic outcomes. Cash flows form the basis of credit and valuation models since you are interested in real cash rather than accounting profit. The various stakeholders, such as potential investors and lenders as well as suppliers, customers and the government, will have different interests and priorities. For example:

  • Investors need to assess value and consider whether ...

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