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#1
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Make Forecasts - How extensive is it?
I figured that I would check with the various Excel gurus to see what I have
to deal with related to this topic. Here goes: 1) My boss has asked me to help him forecast different expenses for next year based on the last four years. 2) I'm very familar with Excel's various versions (2000-2007) and can do most things. We use 2003 and 2007. However, I have never deal with Excel's forecasting feature and capabilities. I just spent 20 minutes reading about it and another hour trying out an example in one of my Excel books. It seems VERY complicated. 3) Here are my questions: a) How much is there to forecasting? How much time would one need to spend to get a grasp of the basics before trying to explain this to someone? b) Does forecasting really require an extensive understanding of finances and terminology? 4) I don't know if I'm going to end up "over my head" as I start to address this request. Any suggestions/advice would be greatly appreciated ! Thanks! Juggletwo |
#2
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Make Forecasts - How extensive is it?
On Jul 25, 9:46*am, Jugglertwo
wrote: 3) Here are my questions: a) How much is there to forecasting? The answer depends on your definition of a "correct" (reasonable) forecast. Are you familiar with the term GIGO ("garbage in, garbage out")? Forecasting can be as simple as using the FORECAST() function in Excel. (See the Help text.) But often that leads to an "incorrect" (inaccurate) forecaste, simply because a linear extrapolation of the past does not correctly forecast the future in many situations. How much time would one need to spend to get a grasp of the basics before trying to explain this to someone? A little or a lot, depending on the sophistication of the explanation required. I think you mean: how much prestudy would you need before you could understand someone's explanation? Unfortunately, the answer is the same: a little or a lot, depending the sophistication of the explanation and the skill of the teacher. The right person would tailor the explanation to you; and in many cases, the explanation can be made relatively simple. At a minimum, I would say that it would be ideal if you have a basic understanding of statistics. The degree of knowledge required depends on the complexity of the forecasting model and the tools that you choose to use. Does forecasting really require an extensive understanding of finances and terminology? Generally, you need some understanding of the thing that you are forecasting. For example, if you are forecasting product demand, you should first understand what that demand depends on. Is it seasonable? How is it related, or not, to the state of economy or other external circumstances? But as a start, you might try simply charting past data and see what trends you can intuit from it. This can be a dangerous approach; but it is probably the most common approach. For example, if you observe a linear trend, use the FORECAST() function or linear trendline. HTH. ----- original posting ----- On Jul 25, 9:46 am, Jugglertwo wrote: I figured that I would check with the various Excel gurus to see what I have to deal with related to this topic. Here goes: 1) My boss has asked me to help him forecast different expenses for next year based on the last four years. 2) I'm very familar with Excel's various versions (2000-2007) and can do most things. We use 2003 and 2007. However, I have never deal with Excel's forecasting feature and capabilities. I just spent 20 minutes reading about it and another hour trying out an example in one of my Excel books. It seems VERY complicated. 3) Here are my questions: a) How much is there to forecasting? How much time would one need to spend to get a grasp of the basics before trying to explain this to someone? b) Does forecasting really require an extensive understanding of finances and terminology? 4) I don't know if I'm going to end up "over my head" as I start to address this request. Any suggestions/advice would be greatly appreciated ! Thanks! Juggletwo |
#3
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Make Forecasts - How extensive is it?
thanks so much for your thorough response. This was exactly what I was
looking for and I find it very helpful as I move forward with this at work. thanks again! Jugglertwo "joeu2004" wrote: On Jul 25, 9:46 am, Jugglertwo wrote: 3) Here are my questions: a) How much is there to forecasting? The answer depends on your definition of a "correct" (reasonable) forecast. Are you familiar with the term GIGO ("garbage in, garbage out")? Forecasting can be as simple as using the FORECAST() function in Excel. (See the Help text.) But often that leads to an "incorrect" (inaccurate) forecaste, simply because a linear extrapolation of the past does not correctly forecast the future in many situations. How much time would one need to spend to get a grasp of the basics before trying to explain this to someone? A little or a lot, depending on the sophistication of the explanation required. I think you mean: how much prestudy would you need before you could understand someone's explanation? Unfortunately, the answer is the same: a little or a lot, depending the sophistication of the explanation and the skill of the teacher. The right person would tailor the explanation to you; and in many cases, the explanation can be made relatively simple. At a minimum, I would say that it would be ideal if you have a basic understanding of statistics. The degree of knowledge required depends on the complexity of the forecasting model and the tools that you choose to use. Does forecasting really require an extensive understanding of finances and terminology? Generally, you need some understanding of the thing that you are forecasting. For example, if you are forecasting product demand, you should first understand what that demand depends on. Is it seasonable? How is it related, or not, to the state of economy or other external circumstances? But as a start, you might try simply charting past data and see what trends you can intuit from it. This can be a dangerous approach; but it is probably the most common approach. For example, if you observe a linear trend, use the FORECAST() function or linear trendline. HTH. ----- original posting ----- On Jul 25, 9:46 am, Jugglertwo wrote: I figured that I would check with the various Excel gurus to see what I have to deal with related to this topic. Here goes: 1) My boss has asked me to help him forecast different expenses for next year based on the last four years. 2) I'm very familar with Excel's various versions (2000-2007) and can do most things. We use 2003 and 2007. However, I have never deal with Excel's forecasting feature and capabilities. I just spent 20 minutes reading about it and another hour trying out an example in one of my Excel books. It seems VERY complicated. 3) Here are my questions: a) How much is there to forecasting? How much time would one need to spend to get a grasp of the basics before trying to explain this to someone? b) Does forecasting really require an extensive understanding of finances and terminology? 4) I don't know if I'm going to end up "over my head" as I start to address this request. Any suggestions/advice would be greatly appreciated ! Thanks! Juggletwo |
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