Skip to main content

Short-Term Forecasting Methods

  • Chapter

Part of the Studies in Finance and Accounting book series

Abstract

Forecasting is a vital ingredient in the making of both long-term and short-term plans. For example, in the control and management of working capital we are attempting to optimise the future profitability-risk profile of the firm and this will require, amongst other things, forecasts of the future demand for inventory, the level of future interest rates and the availability of future finance. Many of the formal decision models discussed previously in the book rely on forecasts of demand functions as one input and the ‘optimal’ solutions produced therefrom are dependent upon the forecasting accuracy. The focal point for the planning of working capital is the sales forecast; from this, fairly reliable assumptions can be made as regards the management of inventory, debtors, cash and their funding. Table 7.1 shows the relationships between the sales figures and the various components of working capital — clearly sales has an extremely important impact.

This is a preview of subscription content, access via your institution.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. G. E. P. Box and G. M. Jenkins, Time Series Forecasting and Control (Holden Day, 1968).

    Google Scholar 

  2. I.C.I., Mathematical Trend Curves: An Aid to Forecasting, I.C.I. Monograph, No. 1 (Oliver & Boyd, 1964).

    Google Scholar 

  3. The Electricity Council, Economic Planning and Electricity Forecasting (1966).

    Google Scholar 

  4. ‘Prospects for the British Car Industry’, National Institute Economic Review, 17 (September 1971). See also ‘Long Term Forecasts of Demand for Cars, Selected Consumer Durables, and Energy’, National Institute Economic Review, 40 (May 1967).

    Google Scholar 

  5. A. Harberger, The Demand for Durable Goods (University of Chicago Press, 1960).

    Google Scholar 

  6. K. Cowling, Market Structure and Corporate Behaviour (Gray-Mills Publishing Ltd, 1972).

    Google Scholar 

  7. M. A. Firth, Forecasting Methods for Management (Edward Arnold, 1976).

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Copyright information

© 1976 Michael Firth

About this chapter

Cite this chapter

Firth, M. (1976). Short-Term Forecasting Methods. In: Management of Working Capital. Studies in Finance and Accounting. Palgrave, London. https://doi.org/10.1007/978-1-349-15683-2_7

Download citation