Forecasting Using Financial Statements

Introduction

• Welcome
• What you should know
• Exercise files

1. Finance Basics

• What is finance?
• The four different financial statements
• The accounting equation
• Financial forecasting

2. Simple Financial Forecasting

• Naive approach
• Simple moving average
• Weighted moving average
• Seasonal adjusted trend
• Simple exponential smoothing

3. Pro Forma Financial Statements

• Contextualize the situation
• Pro forma and operationalization
• Percent of sales forecasting
• Property, plant, and equipment
• Borrowing and interest expense
• Income tax expense
• Equity and cash
• Make adjustments

4. Projecting Cash Flows

• Cash flows vs. pro forma statements
• Earnings before interest and taxes
• Depreciation and capital expenditures
• Net working capital and free cash flow

5. Introduction to Regression Analysis

• What is a regression?
• Univariate example
• Hidden variables
• Multivariate example

Conclusion

• Next steps