1.6 KiB
1.6 KiB
Section 7 | Lesson 40 - Forecasting, Budgeting, Fiscal Year
Notes
How do companies make budges How do they forcast
Forecastin is always based on a percentage of sales.
- forecast what your sales are going to be
- everything else is just a percent of revenue
when to companies forecast
- Public companies forecast quarterly
-
Startups forecast monthly
- most startups collapse
Fiscal years
- companies note when a season ends
- companies also regard their years as "ending" on a different months
-
some companies end on black friday
- this is when they make their most money
- japanese companies end in march
Ethics
- be conservative and honest with forecasts
-
jailtime
- it's easy to make clerical mistakes
- overlook unethical co workers
- some companies try to take from a different quarter to make up shortfalls
Cash Conversion Period Ratio
-
COGS: Cost of Goods Sold
- how much it costs for goods for the day
examples
- $5000 of inventory
- COGS is $50
- we have 100 days worth of goods
if we put $1 into inventory it won't be converted into cash for another 50 days
Inventory to sale conversion period
\(\text{ISCP} = \frac{\text{average inventories}}{\text{COGS} \cdot 365}\)