Professional Documents
Culture Documents
Untitled
Untitled
Time series methods are especially good for short-term forecasting where, within reason, the
past behaviour of a particular variable is a good indicator of its future behaviour, at least in the
short-term. The typical example here is short-term demand forecasting. Note the difference
between demand and sales - demand is what customers want - sales is what we sell, and the
two may be different.
Long Term
Generally, the adjusted net income method is used for creating long term forecasts. The data
required for preparing the adjusted net income forecast is acquired from the corporate
budgets. The net income method monitors working capital changes and foretells financial
requirements. The major downside to this method is that it does not allow tracing individual
cash flows despite it being a great tool in the arsenal for showing the aggregate impact of fund
flows.