Question

a) what do we mean by financial analysis? what are the goals of financial analysis and forecasting? what kind of organizations do the vast majority of analysis work for?

b) with each investment you make, you should have the courage and the conviction to place at least 10% of your net worth in that stock Warren Buffett. Discuss

c) critique the statement" No equity investor needs to understand valuation models because real-time market prices of equities are easy to obtain online"

describe the steps needed in making a comprehensive financial forecast

Answer 1

The steps needed in making a comprehensive financial forcast :

• Define revenue: The first and formost part in forecasting is to estimate the revenue by analysing your previous growth trend and expectation of growth in revenue.
• Create revenue for 1 years ; The revenue forecast that you are making should be a for a period of 1 year or 12 month or for one quarter so that you can base the other expenditure in that period as percentage of revenue.
• Fixed cost and Variable; Do forecast your variable cost as per unit cost and keep the fixed cost in absolute number.
• Other Expense ; Do forecast other expenses that can impact your revenue and try to estimate them as percentage of your revenue, it will also give you an Idea where you are spending too much of your resources.