Sales forcast

Question 1

What are the steps of financial planning?

Answer 1

1. Forecast sales/revenues (S)
2. Determine the firm’s production plan
3. Project the cash budget
4. Forecast the pro-forma financial statement

Question 2

What is financial forecasting?

Answer 2

Financial forecasting reffers to make projections based on a set of relevand info/data in order to allow/ease the firm’s budgeting activities.

Question 3

What are the sales forecasting methods?

Answer 3

• Subjective
• Objective

Question 4

How can you caracterise the subjective sales forecasts methods?

Answer 4

They are based on rationales, judgements, intuition and experience

Question 5

How can you characterise the objective sales forecasts methods?

Answer 5

They use quantitative methods of forecasting and extrapolating

Question 6

What are the advantages of the sales team (marketing department)?

Answer 6

• Direct contact with customers
• Identifies the products with strong/weak dynamics
• Detect trends in the customers’ orders

Question 7

What are the disadvantages of the sales team?
(Marketing department)?

Answer 7

• A substantial part from the sales team revenues/salaries are performance bonuses
• There is a tendency that the sales team will intentionally forecast lower future sales in order to be able to easily surpass these targets (for earning the performance bonuses)

Question 8

What are seasonalities?

Answer 8

Seasonalities are patterns that repeat at fixed time intervals

Ex: ice cream consumption (repeats yearly)

Question 9

What are cycles?

Answer 9

Cycles are patterns that repeat at variable time intervals