Complete Example on Forecasting

Case Study - "Scholarship Information Services"

Murray Wilson, a recent university graduate, has been thinking of a establishing a business for quite some time. Like many aspiring entrepreneurs wanting to establish a company, Murray lacked a business idea. One evening, however, while thinking back on his university years, it finally came to him - MONEY. He thought: "something I never had while in university was money. If only I had money during this time, I would have been able to focus more on studying". Murray identified a major "need", but still didn't have a business idea or product to satisfy the need.

Weeks went by and Murray still didn't have an business idea. Finally, it came to him. "I will develop a listing of organizations who provide university students with scholarships and bursaries ( a scholarship or bursary is "free" money students receive from profit and non-profit organizations to assist them in financing their university education). He thought, if students knew of these organizations, then their chances of receiving a scholarship or bursary would greatly increase.

Murray conducted some basis research and discovered thousands and thousands of organizations provide students with scholarships and bursaries each year. He was shocked and amazed at this discovery. "During my university years, I didn't apply for any scholarships or bursaries because I didn't think any existed that met my situation or qualifications; - but now I know differently".

Murray dwelled on the idea for quite some time and decided to develop a business plan to determine the feasibility of the project. His initial thoughts of the business are as follows:

  • my business name will be Scholarship Information Services;
  • I will register his business name as a sole-proprietorship;
  • the product will be a listing of organizations who provide scholarships and bursaries to university students;
  • I will advertising the product in general newspapers and in university newspapers;
  • the location of the business will be at my home;
  • two (2) individuals will be hired to develop and sell the product;
  • I will sell the product vis-a-vis direct mail;
  • I will invest my second car into the business, along with my computer and other computer accessories;
  • I think I can afford to personally invest $7,500 cash into my company;
  • Other assumptions will be provided throughout the forecasting process.


The above Case Study will be used throughout our entire discussion on forecasting financial statements & analysis. Recall from previous discussions, the first step in forecasting is to develop financial budgets. Step 2 through step 8 involves creating the forecasted financial statements and analysis. Therefore, in order for Murray's to complete the forecasting process, he must first create his Financial Budgets (14 budgets in all). After the financial budgets have been completed, Murray will use them to develop his forecasted financial statements and analysis (step 2 through to step 8). Below, once again, summaries each step required in the forecasting process:

    Step 1   Creating Your Forecasted Financial Budgets
    Step 2   Creating Your Forecasted Cash Flow Statement
    Step 3   Creating Your Forecasted Income Statement
    Step 4   Creating Your Forecasted Balance Sheet
    Step 5   Creating Your Forecasted Ratio Analysis
    Step 6   Creating Your Forecasted Break-even Point
    Step 7   Creating Your Forecasted Sensitivity Analysis
    Step 8   Creating Your Notes to Financial Statements

Categories: Forecasting