Question

What is an accounting based forecasting model?

Answer 1

Forecasting is done by using the past or present data or historic data to determine the situation or to predict future trends. It is the technique to plan for the future which is essential for any business. Forecasting includes factors such as:

1. Volume of sales

2. Expenses.

3. Investment

4. Profitability

Accounting based forecasting model are the quantitative techniques of forecasting.

1. Time series forecasting- Information is collected to identify trends over a period of time.

2. Proforma Statements- sales figures are used from the previous years after excluding certain one time costs.

3. Moving averages- the average of past data has been taken and project it forward.

4. Regression analysis

5. Exponential smoothing is used ffor the time series data analysis.