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!