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  • 2012 Summer: Volume 10, Issue 1
  • Equity Method of Forecasting

    • David Schalow

    Use this link to view the PDF file: Equity Method of Forecasting

    Title:

    Equity Method of Forecasting

    Author(s):

    David Schalow

    Publication Date:

    2012

    Journal Title:

    The Journal of Finance Issues

    Volume Number:

    10

    Issue Number:

    1

    Abstract:

    Projecting financial performance into the future is an important task for any business venture, and this is particularly true for new startups that have no track record. This paper examines the common pedagogy of “Percent of Sales Method/” forecasting and suggests a new approach using initial equity rather than sales as the starting point for startups without a great deal of historical data. Using an unknown estimate like sales to forecast the remaining unknown values of the balance sheet and income statement is fraught with difficulties. Using a known value such as initial equity might allow the entrepreneur or other financial professionals to develop proforma statements which will be more realistic and perhaps more believable to outside stakeholders.

    First Page:

    128

    Last Page:

    134

    Total Pages:

    6