Forecasting Techniques Interview Questions and Answers
Forecasting Techniques FAQ
1.What is financial forecasting?
Financial forecasting is predicting future financial conditions and performance based on historical data and assumptions.
2. What is the difference between budgeting and forecasting?
Budgeting is a plan for the future, while forecasting is an estimate of what is likely to happen.
3. What are common methods of financial forecasting?
Trend analysis, regression analysis, time series, and scenario planning.
4. What is a rolling forecast?
A forecast that continuously updates, adding a new period when the current period ends.
5. How is a sales forecast developed?
By analyzing past sales data, market trends, and external factors like economic conditions.
6. What is a bottom-up forecast?
A forecasting method that starts at the department level and aggregates upwards to create a company-wide forecast.
7. What is a top-down forecast?
A method where overall company forecasts are created first and then allocated down to departments.
8. How do sensitivity analyses help in forecasting?
They assess how different variables (e.g., sales volume or costs) impact the forecasted results.
9. What role does scenario analysis play in forecasting?
It involves creating multiple future scenarios (best case, worst case, etc.) to assess risks and opportunities.
10. What is break-even analysis in forecasting?
A calculation to determine when total revenues equal total costs, predicting when a business will start to generate profit.