The goal of profit forecast is to estimate future turnover and profitability of the company. Trends per area of business and cost center are an essential part of this. Fundamental information for profit forecast in terms of turnover and sales margin is obtained directly from sales forecast.
In Revise EPM application, the forecasting process has been constructed as a systematically progressing monthly operation. When a new forecast is being made, the previous forecast and comparison with the actual outturn is used for reference. As the differences are then systematically analyzed, the experience and expertise of the forecasters increase, and the success adds to their motivation. As a result of this process, the forecast usually becomes fairly accurate already after six months’ work. From a technical point of view, the sectors of the profit forecast are constructed as follows:
- Turnover forecast is derived directly from sales forecasts, together with sales margin estimate and thus also variable costs.
- For fixed costs, the forecast can be constructed on an account or account group basis by dimension (customer group, product group, division, project etc.) Historical data and trends can be utilized for this purpose.
- Depreciations are obtained automatically from investment calculations, where also old installments for fixed assets are included.
- Most financing items are obtained automatically from debt tables.
- Direct taxes can be forecast automatically.