Comparing figures on a monthly, quarterly, and annual basis helps investors compare

trends, changes, and growth and determine whether the company has the potential to return what
you have invested. Also, it is significant to look at forecasted figures to make more informed
business decisions rooted in facts and data. It allows investors to get to know the company’s
plans in relation to funding, operations, and budgeting. Before investing, one might also consider
whether the company used top-down financial forecasts or bottom-up financial forecasting.
Under a top-down financial forecasting model, companies examine their potential revenues by
examining their high-level targets and aspirations, combined with an idea of what should be
achievable for the business. Generally speaking, top-down forecasting is useful for early-stage
firms with little past financial data or larger companies with a broader range of revenue sources.
Although simple to carry out, top-down forecasts are not as granular as other methods and are
more often regarded as a starting point for future projections.