chapter 6 PPT - Prospective Analysis: Forecasting By Yong...

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Prospective Analysis: Forecasting By Yong Cao
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Introduction Forecasts are useful to: Managers / analysts / bankers and debt market participants. Forecasts also can be an estimate of a firm’s value. Two tasks of prospective analysis: forecasting & valuation Forecasting is not a separate analysis How to structure the forecast, offer information useful in getting started, explore the relationship between the other analytical steps and forecasting, and give detailed steps to forecast earnings, balance sheet data, and cash flows?
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The overall structure of the forecast Comprehensive Forecast: earnings forecast, as well as a forecast of cash flows and balance sheet Advantages: guard against unrealistic implicit assumptions Forecasts related to key drivers, like sales and profit margin Forecasts of cash flows It’s possible to move directly to forecasts of cash flows In most cases, convert from accrual-based accounts to cash flows
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This note was uploaded on 04/19/2011 for the course ACCOUNTING 610 taught by Professor Dr.fan during the Fall '10 term at California State University , Monterey Bay.

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chapter 6 PPT - Prospective Analysis: Forecasting By Yong...

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