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Theme 2
2.2 Financial Planning
2.2.1 Sales Forecasting
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Tilly Grunwell
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Cards (14)
What is the purpose of sales forecasting in business planning?
To predict the
quantity
of a product a business is likely to sell
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How can sales forecasts help a business calculate its sales revenue?
By coupling predicted sales
quantity
with the selling
price
of products
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Why is profit forecasting important for businesses?
Because profit is the main
objective
for most businesses
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How does sales forecasting assist with cash flow forecasting?
It provides the biggest cash
inflow
for a business
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In what way can sales forecasts influence staffing and human resource plans?
The
more
sales expected, the
more
staff required to produce
output
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Why is it important for a business to meet demand with supply?
To ensure that consumer
demand
for a product can be
satisfied
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What factors can affect the accuracy of a sales forecast?
Consumer
trends,
economic
variables, and
competitor
actions
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How can consumer trends impact sales forecasts?
Changes in
demographics
and consumer
preferences
can alter demand
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What economic variable can lead to uncertainty in consumer spending?
Inflation
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How can falling interest rates affect consumer spending?
They can encourage consumers to spend
more
due to
cheaper
borrowing
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What happens to consumer spending when unemployment rises?
People's income
falls
, leading to
decreased
spending
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How can competitor actions influence a business's sales forecast?
Competitors'
promotional
campaigns or
price
cuts can shift consumer preferences
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What is extrapolation in the context of sales forecasting?
Using past
trends
to predict future
sales
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If a product's sales have been growing rapidly, what might happen in the future according to its product life cycle?
It may reach
maturity
and then
decline
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