From the course: Using Data in Financial Analysis
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Regressions for forecasting - Microsoft Excel Tutorial
From the course: Using Data in Financial Analysis
Regressions for forecasting
- [Instructor] Now that you have an understanding of regressions, you might be asking yourself, where can you use them? Well, as I've explained, regressions allow a practical "what if" type testing when we change one or more variables in a scenario. For example, how would the profit for our firm be impacted if marketing spend is doubled? That is a type of question we can answer with a regression, but you can also use regressions in a variety of financial planning and analysis tasks. For example, in audit work, the big four accounting firms use regressions to help in doing an audit to determine expected sales. If their regression output indicates that sales should be, say, 1 billion, and instead, sales are 1.7 billion, well, if that's a large deviation from historicals, that might indicate an audit risk and something that requires more careful checking. So we can use regressions for very practical purposes, both for…
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