Estimations

Question 1

What to SAY and then do at the very end of an estimation?

Answer 1

‘My number is xyz let me just check thsi actually makes sense - do reality check don’t just check the maths)

Check your answer (compare it to a number you know/find something to benchmark your answer against)

Eg. if we calculated that a protein potato chip potential market size is $500B/year but we know Amazon’s revenue is $470B/year then clealry our answer is wrong.

Question 2

driver of sales of tyres is

Answer 2

the replacement rate of tyres

Question 3

If the estimation q is about a durable good (eg window frames, cars, tyres etc) then remember that …

Answer 3

the driver of sales of the durable good is the replacement rate of the good (+ the growth rate)

eg replacement rate of window frames (+ growth rate if new apartments are being built and hence window frames need to be bought)

Question 4

growth drivers for mattresses

Answer 4

changes in

beds per person,
population,
penetration of mattresses and

Question 5

utilisation rate

Answer 5

no. of hairdressers, gas stations, uber drivers etc

Question 6

active working weeks

Answer 6

2-4 weeks paid leave
holidays/sickness days 2 weeks
(10 vacation days, 4 sick days?)