Week 4

• Forecasting the revenues of a business

  • Process of estimating future revenue based on historical data, market trends, and business strategies
  • It is essential for budgeting, financial planning, and decision making
• Why is revenue forecasting important?

  • Helps set realistic sales target
  • Helps with budgeting and cash flow management
  • Helps make decisions about staffing, pricing, marketing
  • Helps identify opportunities for growth
  • Helps mitigate potential risks
• Revenue


  • The total amount of money a business earns from sales
• Profit


  The amount left after subtracting expenses from revenue
• Sales


  Transaction that includes an exchange of services or goods for a certain amount of money
• Service income


  Used to record revenues earned by rendering services
• Factors considered as basis in forecasting revenues

  • Economic condition of the country
  • Competing businesses or competitors
  • Changes happening in the community
  • Internal aspect of the business
• Start-up cost

  • Start-up capital : the initial funding needed to launch a business
  • Working capital : the money a business leads to cover its day-to-day expenses and operations
• Operating costs

  • Fixed costs : costs that do not change regardless of the level of production or sales
  • Variable costs : costs that change based on the level of production or sales
• Income and profit

  • Income is the total money a business or individual earns before deducting any expenses
  • Profit is the amount left after subtracting expenses from the income
• Mark up


  Refers to the amount added to the cost to come up with the selling price