8: Company Analysis—Forecasting

title: “Chapter 7: Industry and Competitive Analysis” type: docs nav_weight: 70000

In this section

• Principles and Approaches to Sales Forecasting
  Principles and Approaches to Sales Forecasting (CFA Level 1): Importance of Sales Forecasting, Key Principles of Sales Forecasting, and Approaches to Sales Forecasting. Key definitions, formulas, and exam tips.
• Estimating Expenses, Margins, and Capital Expenditures
  Estimating Expenses, Margins, and Capital Expenditures (CFA Level 1): Classifying Expenses: Variable vs. Fixed, Historical Cost Patterns and Cost Drivers, and Margins: Gross, Operating, and Net. Key definitions, formulas, and exam tips.
• Top-Down vs. Bottom-Up Forecasting Methodologies
  Top-Down vs. Bottom-Up Forecasting Methodologies (CFA Level 1): What Is Top-Down Forecasting?, Advantages of Top-Down Forecasting, and Limitations of Top-Down Forecasting. Key definitions, formulas, and exam tips.
• Scenario Analysis and Stress Testing
  Scenario Analysis and Stress Testing (CFA Level 1): Key Concepts in Scenario Analysis, Scenario Analysis vs. Sensitivity Analysis, and Steps in Scenario Analysis. Key definitions, formulas, and exam tips.
• Sensitivity Analysis under Different Macroeconomic Scenarios
  Sensitivity Analysis under Different Macroeconomic Scenarios (CFA Level 1): Differences Between Sensitivity and Scenario Analysis and Why Sensitivity Analysis Matters for Forecasting. Key definitions, formulas, and exam tips.
• Forecasting Equity Dilution and Share Repurchases
  Forecasting Equity Dilution and Share Repurchases (CFA Level 1): Key Concepts, What Is Equity Dilution?, and Share Repurchases as a Counterbalance. Key definitions, formulas, and exam tips.
• Forecasting Cyclical vs. Non-Cyclical Firms
  Forecasting Cyclical vs. Non-Cyclical Firms (CFA Level 1): Distinguishing Cyclical and Non-Cyclical Firms, Economic Indicators and Industry Sensitivities, and Leading Indicators for Cyclical Firms. Key definitions, formulas, and exam tips.
• Using Monte Carlo Simulations in Forecasting
  Using Monte Carlo Simulations in Forecasting (CFA Level 1): Understanding the Concept of Monte Carlo Simulation, Selecting Probability Distributions, and Incorporating Correlation Among Variables. Key definitions, formulas, and exam tips.
• Percent-of-Sales Forecasting Approach
  Percent-of-Sales Forecasting Approach (CFA Level 1): Foundational Principles of the Percent-of-Sales Method, Key Components of the Approach, and Step-by-Step Implementation. Key definitions, formulas, and exam tips.
• Data Collection, Integrity, and Common Pitfalls
  Data Collection, Integrity, and Common Pitfalls (CFA Level 1): Importance of Data in Forecasting, Data Collection, and Identifying Key Sources. Key definitions, formulas, and exam tips.