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Various studies show that increasing financial forecast accuracy will lead to higher profits, lower inventory levels and a higher share price.  By how much varies by industry, time period forecasted, forecast measure, business model and a myriad of other factors that all play into the financial forecast itself. 

With the speed of business constantly increasing, the ability to determine if financial forecast accuracy was due to better methods or external factors gets harder with every passing year. 

This course will cover the most common ways financial planning and analysis professionals can measure the accuracy of their financial forecasts.  Measures reviewed can be used at the corporate, division or product line level. 

 

 

 

Learning Objectives

  • Identify financial forecast control measures
  • Discover how to calculate mean absolute deviation (MAD for short) and Mean Absolute Percentage Deviation (MAPD)
  • Recognize 3 types of internal financial forecasts
  • Discover how to calculate cumulative error and average error

 

 

Last updated/reviewed: January 28, 2018

12 Reviews (36 ratings)Reviews

3
Member's Profile
It is great for an overview of the forecasting process, but I am looking for a more detailed presentation on how to do the calculations and how to link cells to build the worksheets.
5
Anonymous Author
Excellent course. Everyone in FP&A should take this as it's finance measuring finance - something we don't do nearly often enough. This provides a useful framework and examples.
4
Member's Profile
Some really insightful thoughts on improving forecasting but could do with some practical examples to support the arguments and conclusions presented.
4
Anonymous Author
Great takeaways, I would have liked to run through a couple more examples, or some service industry forecasting techniques, specific to the industry.
4
Anonymous Author
Good explanations on how to calculate forecast errors. The average error discussion was diverted to standard deviation, which made it confusing.
Anonymous Author
Good example of how to measure forecast accuracy and how improving can improve bottom line.
4
Anonymous Author
Good overview. A 2nd course deeper case studies would be helpful.
5
Member's Profile
Good intro to tools that can help improve forecasting.
5
Anonymous Author
interesting aspect of forecasting; practical lesson
4
Member's Profile
It's a great course. It makes you think.
4
Member's Profile
Simple and very clear.
5
Member's Profile
ok

Prerequisites

Course Complexity: Advanced

Prerequisite: Previous experience in finance

 

Advanced Preparation: None

 

Education Provider Information

Company:
Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact:
For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Course Syllabus
INTRODUCTION AND OVERVIEW
Calculations
  6:11What is MAD and MAPD? How do I calculate Both?
  4:04Calculate Cumulative Error and Average Error
Control
  4:24Setting Forecast Control Measures
  2:39Playing Your Financial Forecast Handicap
Conclusion
  6:35Course Take-Aways
SUPPORTING MATERIALS
  PDFSlides: Calculating Financial Forecast Accuracy
  PDFCalculating Financial Forecast Accuracy Glossary/Index
REVIEW & TEST
  quizREVIEW QUESTIONS
 examFINAL EXAM