All language subtitles for 23 - Offset Scenario Step4 V1 - lang_en

So, finally we're at the last step in the financial forecasting process.

Here, I've created the equations for you so you can see what I'm doing for year four,

year five, and we start plugging in the values from the assumptions.

So, this one is year four revenue will be based off of year three's revenue,

so it's just going to add whatever the assumption here above revenue growth.

So, you just say,

G7 which is previous year's revenue times one plus the revenue growth percent expected.

So, you add that and you get this value,

so you can, let's just see.

So, it's taking this year,

year three's revenue times one plus minus three,

and that's the reason why it's actually going down.

For year five, it's doing the same thing.

You just a reference into year four instead.

So that's why the H7 and we're basing it off I19.

So, see that here, okay.

Then for gross margins,

we are forecasting it based off of the revenue,

so we just take whatever the revenue is for year four

times the gross margin and for F column,

so it's just multiplying this revenue with

gross margin and that gives us the gross profit.

Similarly here, it's just year five's revenue times the gross margin of this,

all of this formula is here so you can keep referencing to that.

H7 which is revenue times the operating margin for year four and for year five.

So, now we can see that our financial forecast is based off

the historical data for this company but also the assumptions that we make,

and as described earlier as we change

the scenario analysis the forecast to the metrics change as well.

So now, we have a dynamic representation of our financial forecast based on scenarios.

So, that's called scenario analysis as well,

it's one way to create a financial forecast using some advanced Excel tools.

I've provided the formulas that I've used below

and you can also find them in the CSV file in the resource.

I hope you find this video helpful.