ABSTRACT
This chapter introduces a long-term forecasting model that is a stepping-stone to estimate the market value of a business. In Chapter 6, using a naïve method of forecasting, the annual customer count of the Y-2 was projected to increase 15% to 58,604 and the average spending of each customer (average check price (ACP)) was projected to increase 10% to $29.60. If these projections work, the annual sales of Y-2 will be $1,734,737. These are presented again in Table 6.1. All expenses were estimated based on the projected customer count using their fixed cost amounts and the variable cost amount per customer as the relevant statistical parameters obtained through the Regression Analysis technique. Finally, ratio analysis was conducted, and the results were examined with those of well-known similar businesses to test the reasonableness. It was concluded that the forecast of Y-2 was reasonable and achievable (refer Table 6.1: Customer Count and Sales Projection).
