Question

In: Finance

What impact on share price is implied by financial forecasts of sales and margin?

What impact on share price is implied by financial forecasts of sales and margin?

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Expert Solution

The impact on share price is implied by financial forecast of sales and margin because sales and margin are always important in generating higher amount of profits and highet amount of volume.

When there is higher financial forecast of sales and margin is extended by company, and it is forecasted that it is going to acquire higher market share by growth in sales and growth in profits it would be helpful for the company in overall increase in its share price and it will eventually lead to overall increase in the market capitalisation of the company.

When the financial forecast related to sales and overall growth and profit margin of the company is expected to shrink further in coming years then, it will have a negative impact on the share price of the company because it will be affecting into reduction in overall sales in the future and people will discount it by assigning it with a lower price to earning and hence the overall share price of the company will go down and it will lead to overall market capitalisation of the company going down.


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