Meaning of Table of Contents [show

Sales

Forecasting
Prediction of future sales is what is
known as sales forecasting. Every
manufacturer makes an estimation of
the sales likely to take place in the near
future. It gives focus to the activities of a
business enterprise. In the absence of
sales forecast, a business has to work at
random.

Meaning
Omportance
Methods of Forecasting
SALES
FORECAST accountlearning.com

Sales Forecast-Meaning,
Importance, Methods of forecasting

A businessman who invests a large

amount of capital in his business, cannot
afford to work haphazardly. He has to
plan his production and sales activities.
Forecasting helps the business to work
according to a plan, i.e., systematically.
) It helps to determine production volumes
considering availability of facilities, like
equipment, capital, manpower, space etc.

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(i) It forms a basis of sales budget, production

budget natural budget etc.
(ii) It helps in taking decision about the plant

expansion and changes in production mix

or

should it divert its resource for manufacturing

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i) It forms a basis of sales budget, production

budget natural budget etc.
(ii) It helps in taking decision about the plant
expansion and changes in production mix or
should it divert its resource for manufacturing
other products.

(iv) It helps in deciding policies.

(v) It facilitates in deciding the extent of

advertising etc.
(vi) The sales forecast is a commitment on the
part of the sales department and it must be
achieved during the given period.
(vii) Sales forecast helps in preparing
production and purchasing schedules.
(viii) Accurate sales forecasting is a very good
aid for the purpose of decision making.

(ix) helps in guiding marketing, production

It
and other business activities for achieving
these targets.

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Importance of Sales Forecasting

1. Sales forecasting enables a business
organization to work systematically.

2 Forecast enables the production

manager to set target for his workers.

3. It enables the sales department to fix

responsibilities on every salesman.

4. In the absence of sales forecast, a

business enterprise may work without
any focus and this may result in wastage
of its resources.

5. It helps to cut down wasteful

expenditure and as a result the goods
can be offered at a fair price.

6. Sales forecast enables all the

departments of the business to work
together in proper co-ordination and co
operation.

7. As target is set for each individual and

department, it is easy to control
performance.
8. Sales forecasting is vital for preparing
budget.
9. It helps to determine the production
capacity that is actually required.
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4. In the absence of sales forecast, a

business enterprise may work without
any focus and this may result in wastage
of its resources.

5. It helps to cut down wasteful

expenditure and as a result the goods
can be offered at a fair price.

6. Sales forecast enables all the

departments of the business to work
together in proper co-ordination and co-
operation.

7. As target is set for each individual and

department, it is easy to control
performance.
8. Sales forecasting is vital for preparing
budget.
9. It helps to determine the production
capacity that is actually required.

10. Sales forecast helps in product mix

decisions as well. It enables the
business to decide whether to add a ncw
product to its product line or to drop an
unsuccessful one.

Methods of Sales Forecasting

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