Guidelines for Forecasting Financial Statements from Historical Financial Statements for Valuation Purposes (Updated)

36 Pages Posted: 31 Dec 2005 Last revised: 16 Sep 2009

See all articles by Ignacio Velez-Pareja

Ignacio Velez-Pareja

Grupo Consultor CAV Capital Advisory & Valuation

Date Written: September 10, 2009

Abstract

In this teaching note I list some suggestions that might be useful to take into account when forecasting financial statements departing from historical data. The ideas presented in this note are the result of advising undergraduate and graduate students in the course Econ 195.96/295.96 (Crosslisted: PubPol 264.96): Cash Flow Valuation (CFV): A Basic Introduction to an Integrated Market-Based Approach at Duke University during the Fall of 2005 and my previous experience of teaching the subject at Politécnico Grancolombiano in Bogotá, and other universities in Colombia.

The note is divided in four sections: Section One, Analyzing the Historical Financial Statements, is related to the analysis and use of historical information from the financial statements. In Section Two I mention some tips related to the construction of forecasted financial statements. In Section Three I present a list of tips related to the proper way to valuate the cash flows. In Section Four a brief summary is presented.

Keywords: Financial statements, forecasting, net present value (NPV), firm valuation, equity valuation, cost of capital, cash flow valuation

JEL Classification: D61, G31, H43, M40, M46, D92, E22, E31, M41

Suggested Citation

Velez-Pareja, Ignacio, Guidelines for Forecasting Financial Statements from Historical Financial Statements for Valuation Purposes (Updated) (September 10, 2009). Available at SSRN: https://ssrn.com/abstract=872474 or http://dx.doi.org/10.2139/ssrn.872474

Ignacio Velez-Pareja (Contact Author)

Grupo Consultor CAV Capital Advisory & Valuation ( email )

Ave Miramar # 18-93 Apt 6A
Cartagena
Colombia
+573112333074 (Phone)

HOME PAGE: http://cashflow88.com/decisiones/decisiones.html

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