2.2.1 Sales Forecasting

Question 1

The purpose of sales forecasting

Answer 1

• predict future revenues based on pst sales figures
• they commonly focus on what will happen in the future to:
  
  • volume and value of sales
  • size of the market
  • sales
• important to support planning and can improve the validity of cash flow forecasts
• used to determine resources requirements in a variety of ways

Question 2

Factors that affect sales forecasts

Answer 2

1. Consumer trends
   - seasonal variations
   - fashion
   - long term trends]
2. Economic variables
   - economic growth
   - inflation
   - unemployment
   - interest rates
   - exchange rates
3. Actions of competitors

Question 3

Difficulties of sales forecasting

Answer 3

• requires skill, time and the accurate use of timely data
• the future does not always mirror the past = uses previous data
• too much data = requires careful evaluation to select the most appropriate external data