A forecast is a quantifiable estimate of future demand. Forecasting in business is the process of estimating the future demand for out products and services. Financial statement forecasting allows organizations to evaluate their current operating performance, review the situation of the economy and determine how they will perform in the future. Forecasting is a key practice in the corporate activity. As an essential part of decision-making processes, financial data forecasting supports a firm to evaluate its profitability in the future. Investors look at corporate financial predictions to ensure that senior managers aren't just create a positive numbers of their companies. Potential investors also want to ensure that the business is profitable enough to provide them with the desired return on their invested capital. There are several basic steps to process the financial forecasting. We want through this process to forecasting the income statement, balance sheet, and cash flow of FedEx. Step 1: determine the type of forecasting model to be used. Because FedEx is not a new borne company. The company has very long history, and the data of financial statement is relatively stable. So we will use the historical data to forecasting the financial statement. Step 2: Determine the forecast horizon.
For the express industry, FedEx is always located in the top of total industry, but in recent years, the increasing rate of FedEx has some level of reduce, even there are some minus increasing rate happen. So we want go through recent year’s data, focus five years financial performance to forecasting next two year’s possible financial performance. Step 3: Select one or more forecasting Models.
For this step, we will depend on three different financial statements to combine several different kinds of model to analysis and forecasting next two year’s financial performance. For the income statement, the most important and key entry is sale revenue. So we will use the...
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