BU393 Chapter Notes - Chapter 14: Income Statement, Capital Structure, Capital Expenditure
Document Summary
Company insiders forecasting sales of existing products can use historical data, market surveys, or surveys of sales force. Forecasts for new products or forecasts by outsiders must rely on public data. Sales revenue: = p = price, q = quantity. Forecast price and quantity by identifying drivers: driver: an underlying economic factor that determines the future path of a variable. It"s difficult to forecast price and quantity separately for multi-product firms b/c most corporations don"t provide separate price and quantity data for all their product lines in those situations, we forecast sales revenue. Simplest quantity forecast is based on industry sales forecast and market share forecast: = q = quantity in year t, iq = industry quantity in period t, s = market share of firm in period t. Industry forecasts usually provide rate of growth of sales (quantity) in future can be used to forecast annual sales in periods t+2 and beyond.
