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Entering Forecast Assumptions

Entering Forecast Assumptions

We all know that spreadsheet models often lack transparency.  Users often struggle to understand the modeling relationships that span multiple tabs and books.  FinanceSeer solves this problem by adopting an extremely powerful and intuitive approach to forecasting.  As a result, peers can quickly pick up a financial model and visualize the impact that drivers have on integrated financials.

Key points to understand:

  1. FinanceSeer user a "Driver" dimension to manage forecast rules.
  2. The driver dimension has 5 members (Dependent, Assumption, Common Assumption, Effective Assumption and Result).
  3. These members act as variables in a forecast method.  Not every forecast method will use all 5 variables.
  4. Users can always enter either the result or the assumption.  Users know which input was made based on the anchor icon in the upper right corner of the screen.  If the assumption is anchored, the result is always forecasted (green arrow to the right).  If the result is entered then the assumption is backcasted (green arrow to the left).
  5. If no input is made, the model tries to apply a default assumption (usually zero or the prior period's assumption) and forecasts the result. 
  6. If the account is a subtotal, then it will sum the result and backcast the assumption.
  7. The common assumption acts like a global assumption that can be used to drive a single assumption across multiple accounts and/or entities.  When common assumptions are not applied to a forecast method then the unique assumption and the effective assumption are the same thing.  When a common assumption is applied, the effective assumption represents the impact of the unique assumption and the common assumption.

 

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