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.
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References
G. E. P. Box and G. M. Jenkins, Time Series Forecasting and Control (Holden Day, 1968).
I.C.I., Mathematical Trend Curves: An Aid to Forecasting, I.C.I. Monograph, No. 1 (Oliver & Boyd, 1964).
The Electricity Council, Economic Planning and Electricity Forecasting (1966).
‘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).
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K. Cowling, Market Structure and Corporate Behaviour (Gray-Mills Publishing Ltd, 1972).
M. A. Firth, Forecasting Methods for Management (Edward Arnold, 1976).
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© 1976 Michael Firth
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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
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DOI: https://doi.org/10.1007/978-1-349-15683-2_7
Publisher Name: Palgrave, London
Print ISBN: 978-0-333-18710-4
Online ISBN: 978-1-349-15683-2
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