What are some arguments in favour of and against reporting earnings forecasts?
344510
Cons-Shady companies reporting 'fake' earnings to boost their value.\n\nPros-As an investor, it would surely set my mind at ease.
761602
This type of report is not one that is automatically generated by most accounting software, nor is it one that is normally produced by your accountant, but it is an important analysis for you to have and understand. For any new business, you should predict what gross sales volume level you will have to achieve before you reach the break-even point and then, of course, build to make a profit. For early-stage businesses, you should be able to assess your early prediction and determine how accurate they were, and monitor whether you are actually on track to make the profits you need. Even the mature business would be wise to look at their current break-even point and perhaps find ways to lower that benchmark to increase profits. The recent massive layoffs at large corporations are directed at this goal, lowering the break-even point and increasing profits. \n\n\n*Break-Even Is the Volume Where All Fixed Expenses Are Covered*\n\nYou will start a break-even analysis by establishing all the fixed (overhead) expenses of your business. Since most of these are done on a monthly basis, don’t forget to include the estimated monthly amount of line items that are normally paid on a quarterly or annual basis such as payroll taxes or insurance. For example, if your annual insurance charge is $9,000, use 1/12 of that, or $750 as part of your monthly budget. With the semivariable expense (such as phone charges, travel, and marketing), use that portion that you expect to spend each and every month. \n\nFor the purpose of a model break-even, let’s assume that the fixed expenses look as follows: \n\nAdministrative salaries     $1,500\nRent     800\nUtilities     300\nInsurance    150\nTaxes     210\nTelephone     240\nAuto expense     400\nSupplies     100\nSales and marketing     300\nInterest     100\nMiscellaneous     400\nTotal     $4,500\n\nThese are the expenses that must be covered by your gross profit. Assuming that the gross profit margin is 30 percent, what volume must you have to cover this expense? The answer in this case is 15,000—30 percent of that amount is $4,500, which is your target number. \n\nThe two critical numbers in these calculations are the total of the fixed expense and the percentage of gross profit margin. If your fixed expense is $10,000 and your gross profit margin is 25 percent, your break-even volume must be $40,000. \n\n\n*This Is Not a Static Number*\n\nYou may do a break-even analysis before you even begin your business and determine that your gross margin will come in at a certain percentage and your fixed expense budget will be set at a certain level. You will then be able to establish that your business will break even (and then go on to a profit) at a certain level of sales volume. But your prestart projections and your operating realities may be very different. After three to six months in business, you should compare projections to the real-world results and reassess, if necessary, what volume is required to reach break-even levels. \n\nAlong the way, expenses tend to creep up in both the direct and indirect categories, and you may fall below the break-even volume because you think it is lower than it has become. Take your profit and loss statement every six months or so and refigure your break-even target number.\n\n\n*Ways to Lower Break-Even*\n\nThere are three ways to lower your break-even volume, only two of them involve cost controls (which should always be your goal on an ongoing basis). \n\n1. Lower direct costs, which will raise the gross margin. Be more diligent about purchasing material, controlling inventory, or increasing the productivity of your labor by more cost effective scheduling or adding more efficient technology. \n\n2. Exercise cost controls on your fixed expense, and lower the necessary total dollars. Be careful when cutting expenses that you do so with an overall plan in mind. You can cut too deeply as well as too little and cause distress among workers, or you may pull back
953370
www.iii.co.uk      always good discussion boards, and interesting. Coutts bank (the queens' bank) is always right - they predicted the recent fall in shares in advance, but if you had that much money I don't suppose you would be asking questions here....
38784
I think what you will find is a serious of analysts saying yes and no. Just default to two simple principles. Never underestimate your enemy and never bite off more than you can chew.
461079
basically to forecast how the company will do in the future. Usually some really smart guy will predict how much profits there will be. If the numbers are good (meaning the company is predicted to do very well in the future), people will invest in the company or buy things.
1112722
It works - if you have a system. \n\nSure it is volatile. But that's one ingredient you do need in a market if you are trading for quick profits.\n\nOne simple technique is to examine the news release predictions, make your own mind up, make a decision of how it will affect the price and just enter the market with a close stop loss.\n\nIf you get stopped out when the data is against you, then you live to trade another day. If you don't, well that means the trade went for you and you made some moolah...\n\nGood Luck!
946240
You have to take care of the following points while forecasting\n\n1. The goal of the forecaster is to provide information for decision making\n2. Purpose is to reduce the range of uncertainty about the future\n3. Demand for forecasters is derived based on their final use\n4. Three elements in common are (1) time, (2) uncertainty, and (3) reliance on statistical analysis, primarily of historical data.\n\nNow the process:The Forecasting Process\n1. Determine the purpose or objective of the forecast\n2. Select the relevant theoretical model (identify influences, classify as internal or external, and identify possible constraints)\n3. Collect data\n4. Analyze data  (Data analysis often determines model choice.)\n5. Estimate the original model (You may initially select for comparison more than one technique.)\n6. Evaluate the model and revise\n7. Present initial forecast to decision makers\n8. Make the final revision\n9. Distribute the forecast\n10. Establish monitoring procedures\n\nNow, Forecasting Tips\n1. Consensus forecasts are nothing more than averages.  Study extremely optimistic and pessimistic forecasts for information.\n2. Forecasts are always wrong, be able to explain why.\n3. Focus a forecast on a range rather than a single point.\n4. Develop tools to monitor forecast performance over time.\n5. Simple models are preferred over complex models (cost/benefit analysis).\n6. Understand and be able to explain your forecast procedure to decision makers.\n7. Be especially on the lookout for exogenous forces that influence your forecasts and even lead to turning point errors.\n8. Be humble; your forecast is to help decision makers and is not an end in itself.\n\nI hope, now you know.\n\nAll the best.
458844
http://en.wikipedia.org/wiki/Income_statement\n\nIncome statements for companies indicate how Net Revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed into Net Income (the result after all revenues and expenses have been accounted for, also known as the "bottom line"). The purpose of the income statement is to show managers and investors whether or not the company made or lost money during the period being reported.
292704
depends on your accounting standards.  If the gain is unrealized and you keep your books on a cost basis -- you don't account for it.  The only time that you would account for it would be if you were going to sell your business and you wanted to illustrate a pro-forma Balance Sheet based on market price/value of your assets.  If you were doing that then you would increase the value of your assets and your capital accounts.
700689
Yes it will but not always. \nThe International Financial Reporting Standards also lay emphasis on this point.\n\nSingle standard FS does not only help analysts and investors but also tax authorities, regulators, customers, distriubutors, creditors, financial institutions and shareholders.
719878
Geez, you just negated all of my work and my very existence. I'm not even "no one."\n\nYou're generalizing, and that will get you nowhere.\n\nActually, nobody can "predict" anything. The future is uncertain, that much we should agree upon.\n\nBut some can call a market turn very early with different technical indicators. Many can see the turn, but have no idea how far it will go. Only in hindsight do we sit and wonder, "Why couldn't we see this?"\n\nWhy rely on others to see things for you? You ask this question like someone owes you protection or something. Actually, there are people that will watch it for you full time if you pay them to do so. \n\nCalling the turns is a very difficult thing that not many can do, and so this expertise is worth something. But to expect everyone to keep you informed for nothing is asking a little much, don't you think?
572609
The difference comes from different measures of earnings (the 'E' in EPS).  Some use the last calendar year, some use the last 4 quarters, some use earnings estimates for the coming year or 4 quarters.\n\nYou can calculate your own using the information available at Yahoo and earnings.com or use that info. to figure out the assumptions for the sites you list above.  Then you can use whichever one uses assumptions that make the most sense to you.\n\nAs long as you're consistent it will be a meaningful measure.  I like the past 4 quarters method.
153063
try newsfutures.com the accuracy of something like this is 91% so that's money in the bank if you don't have your personal feelings in the mix but then if you do that site can back up your choices.
1187130
To my knowledge, they can't.  Stock options have nothing to do with inflating earnings.  If anything, they deflate the earnings statement b/c they now have to be expensed at issue (a provision of SOX).  If executives omit the options expense on the earnings report I think they're comitting faud.
458985
The recording of the option income is required by the employer whether a disqualified disposition for incentive stock options or exercise of nonqualified stock options.  \n\nHowever, the gain (or loss) of the stock sales would require you to put the price and date you bought the stock along with the date and amount you sold the stock.\n\nAt the end of the year, the option income will be reflected on a W-2 form (originally options offered when you were an employee) whereas you will be required to post the gain/loss amount on your income tax return for the sale of stock.
81339
There's an excellent book about this, & related scenarios, entitled, "The Wisdom of Crowds," by James Surowiecki. He takes on the notion of "experts" who try to predict the market & advise investors. Historically, they have pretty rotten results.\n\nHow non-experts behave in predictive situations is surprisingly much better. Surowiecki's book is intelligent, interesting, astonishing, and useful, though it's not in any way a guide to investment. His observations and hypotheses aren't offered up in that spirit.\n\nIf you like listening to books-on-tape/CD, I think it's available; and you can download it for a reasonable price at audible.com.\n\nSurowiecki writes on the economy for "The New Yorker."\n\nI can promise that the world will make a little more sense to you and will becoming a little more frustrating when you've read what he has to say.\n\nHe takes on the idea of "clutch hitters" in baseball. Turns out it's a myth.
279461
MINITAB is free for 30 days, provides a reasonable graphical interface and has some good statistical methods.\n\nAlternatively use the excel add-in Analysis ToolPak from the 'Tools->Add-ins' menu. Then click  Tools->Data Analysis and use one of the methods there. (Moving average / exponential smoothing & regression are good simple methods for forecasting)\n\nThe best software is probably ForecastX Wizzard but is very expensive