Scribd
Upload
193 views16 pages

Chapter 4

This document discusses financial forecasting in Python. It covers considerations for forecasting like interpreting data, accounting for changes, and interlinked variables. It also discusses setting assumptions, which can be based on probability, market sentiment, demand or supply. Different types of assumptions are explored. The document demonstrates defining functions for dependencies or sensitivities, and working with pairs and combined lists in Python. It also provides an example of explaining forecasting dependencies and sensitivities using code.

Uploaded by

debojyoti
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
193 views16 pages

Chapter 4

This document discusses financial forecasting in Python. It covers considerations for forecasting like interpreting data, accounting for changes, and interlinked variables. It also discusses setting assumptions, which can be based on probability, market sentiment, demand or supply. Different types of assumptions are explored. The document demonstrates defining functions for dependencies or sensitivities, and working with pairs and combined lists in Python. It also provides an example of explaining forecasting dependencies and sensitivities using code.

Uploaded by

debojyoti
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 16

DataCamp Financial Forecasting in Python

FINANCIAL FORECASTING IN PYTHON

Building sensitive forecast


models and common
forecast assumptions
Victoria Clark
CGMA Financial Analyst
DataCamp Financial Forecasting in Python

Considerations when forecasting


Correctly interpret data
Account for changes in data
Account for interlinked variables
Dependencies
Sensitivities
Set assumptions
DataCamp Financial Forecasting in Python

Assumptions
"Best guess" based on data available
Set at the beginning of a forecast
process
Used to drive forecasting
Can be directly controlled
Can be indirectly controlled
Outside control of company
DataCamp Financial Forecasting in Python

Different types of Assumptions


Probability
Weighted
Market sentiment
Demand and supply
DataCamp Financial Forecasting in Python

Working with pairs in Python

Using Combined Lists

Outcome Probability (%)

1 30

2 20

3 50

outcome_probability = ['1|0.3', '2|0.2', '3|0.5']


DataCamp Financial Forecasting in Python

Define a Python Function

Define a dependency or sensitivity formula

Prevent duplication of work and errors


def assumption1()
if marketsentiment = 0.3:
sales + sales*0.1
else
sales
DataCamp Financial Forecasting in Python

FINANCIAL FORECASTING IN PYTHON

Let's practice!
DataCamp Financial Forecasting in Python

FINANCIAL FORECASTING IN PYTHON

Dependencies and
sensitivity in financial
forecasting
Victoria Clark
CGMA Financial Analyst
DataCamp Financial Forecasting in Python

Explaining forecasting dependencies and sensitivities


Interlinked variables
Changing one variable has a knock-
on effect on other variables
DataCamp Financial Forecasting in Python

Working with dependencies and sensitivities in Python


if x = 0:
x_costs + y_costs
else
x_costs

Expect rush orders


Increases delivery costs by 10%
if month = December:
delivery_costs + delivery_costs*0.1
else
delivery_costs
DataCamp Financial Forecasting in Python

FINANCIAL FORECASTING IN PYTHON

Let's practice!
DataCamp Financial Forecasting in Python

FINANCIAL FORECASTING IN PYTHON

Working with variances in


the forecast

Victoria Clark
CGMA Financial Analyst
DataCamp Financial Forecasting in Python
DataCamp Financial Forecasting in Python

A gap analysis
DataCamp Financial Forecasting in Python

Gap analysis and alternative forecasts


rollingforecast1 = 1200

# First 6 months
sales = 300

# The first dependency has 120 units


dependency1 = 120

units = 30

expected_units = 45

# The adjusted dependency


dependency2 = units + expected_units
dependency

75
DataCamp Financial Forecasting in Python

FINANCIAL FORECASTING IN PYTHON

Congratulations!

You might also like