Chapter 24: Forecasting Financial Statements

In this section

• Building Pro Forma Income Statements
  Learn how to construct forward-looking income statements by examining historical data, forecasting key revenue drivers, and aligning assumptions with costs, depreciation, and share-based expenses.
• Projecting Balance Sheet and Cash Flow Items
  Learn a systematic approach to forecasting key balance sheet components and constructing a robust cash flow statement using the indirect method. Explore days-based working capital assumptions, capital structure considerations, and IFRS vs. US GAAP classifications, all under a comprehensive, real-world-focused framework.
• Sensitivity Analysis for Key Accounting Assumptions
  Learn how to identify and model critical forecasting variables, apply multiple scenario frameworks, and incorporate IFRS vs. US GAAP differences for more robust financial statements forecasting.
• Practice Vignette: Forecasting under Various Scenarios
  Explore how to build pro forma financial statements under IFRS or US GAAP using scenario analysis for a mid-sized manufacturing firm. Learn to incorporate raw material price fluctuations, changing FX rates, capital expansions, and intangible asset valuations into forecasts.