Sales forecasts
- Created by: sophieolivia1999
- Created on: 24-01-18 11:17
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- Sales Forecast
- estimation of future sales that may be based on previous sales figures, market surveys, trends and managerial estimates
- key component of financial planning
- determine:
- BUDGETS, sales forecast increase, business will need to increase budget for production and distribution
- STAFFING LEVELS - business may need fewer or more staff depending on forecast
- PRODUCTION LEVELS - may need to be increased or slowed down to match
- STOCK LEVELS - increased or decreased
- CASH FLOWFORECAST - any change in future sales will alter cash flow forecast and level of working capital available
- PROFIT AND LOSS - direct bearing on this
- Limitations
- based on previous sales figures - can be inaccurate
- factors are beyond control of business
- unexpected fall in sales revenue might lead to reduced budgets, cash flow forecast will need adjusted and more working capital needed
- sales volume - the number of a specific product sold in a given time period
- sales revenue / unit price
- sales revenue - income generated from the sales of a product or service
- selling price X sales volume
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