Submit a two paragraph description of the eight procedure pointsin the slide abo
ID: 389086 • Letter: S
Question
Submit a two paragraph description of the eight procedure pointsin the slide above. This should serve as your project description of the process that you will follow in developing the best company strategic forecast and plan.
Company Pro-Forma Strat Plan 8 Step Building Process 1. Company Revenue (Y) and Characteristics 2. Form a Company Revenue Eco Hypothesis To Identify Important Macroeconomic X Variables and Their Characteristics 3. Test the Hypothesis with Early Regression Y- a B1X1 4. Forecast each X variable using X variable historical B2X2 Data (Expo Smoothing, Decomposition, ARIMA 5. Select the Best X variable Forecast from the 3 methods 6. Revise the Early Regression Model (from 3 above) to best Fit the Company Revenue and Test the Model 7. Use the Regression Forecast with Company 10K to create a Pro- Forma Financial Strategic Plarn 8. Comment on the plan Financial Results and Make Recommendations for Company Performance ImprovementExplanation / Answer
A good strategic forecast and plan for a company needs to be both realistic and measurable. The process in developing the best company strategic forecast and plan involves an 8 step process with variables and their characteristics to measure their results. Let us define the Company’s Revenue as R and list the characteristics in the first step. We need to identify the variables that influence the Company’s Revenue (R). So, the second step is to form a Company Revenue Eco Hypothesis to identify the important macroeconomic variables (X) and let us also list their characteristics. In the third step, the equation needs to be formulated as early regression such as Y=a+B1X1+B2+X2. This hypothetical equation needs to be tested in this stage. In the fourth step, each of the variables (x) needs to be forecasted using the X variable historical data such as Exponential Smoothing, Decomposition, ARIMA (Auto Regressive Integrated Moving Average).
The steps following the fourth step are more of analysis and recommendation. The fifth step involves selecting the best X variable forecast from the three methods suggested above. Each of the alternatives needs to be reviewed carefully to select the best alternative. Now, in the sixth step, we need to revise the Early Regression Model from step 3 so that the selected alternative best fits the Company Revenue and the model needs to be tested. Once the model has been tested as fool-proof option, the seventh step involves using the regression forecast with Company 10K to create a Pro-forma company financial strategic plan. Now, the final step is to analyze the plan and the financial results and make appropriate recommendations for the Company’s continuous performance improvement.