What is Revenue Estimate?

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Revenue forecast refers to the estimation of a company or market's business income for a future period of time (usually one year). Revenue forecast is one of the important indicators for investors to evaluate a company's performance and future prospects.

Definition

Revenue forecast refers to the estimation of a company's or market's future operating income over a certain period (usually a year). It is a crucial indicator for investors to assess a company's performance and future prospects.

Origin

The concept of revenue forecasting developed alongside modern business management and financial analysis. The earliest revenue forecasts can be traced back to the early 20th century when companies began using financial predictions to guide business decisions. With the development of capital markets, revenue forecasts have become an essential tool in investment analysis.

Categories and Features

Revenue forecasts can be categorized into internal and external forecasts. Internal forecasts are conducted by the company itself based on historical data and market trends, usually more detailed and conservative. External forecasts are provided by analysts or market research institutions and may be more market-oriented. Both need to consider market environment, competitive conditions, and macroeconomic factors.

Case Studies

For example, analysts often adjust Apple's revenue forecasts based on its new product release cycles and changes in market demand. In 2019, Apple's revenue forecast was lowered due to slowing iPhone sales but later raised due to growth in services and wearables. Another example is Tesla, whose revenue forecasts often fluctuate due to changes in production capacity and market expansion plans. In 2018, Tesla's revenue forecast was lowered due to Model 3 production issues, but as capacity increased, the forecast was raised.

Common Issues

Common issues investors face when using revenue forecasts include inaccuracies and deviations caused by market changes. A common misconception is relying too heavily on a single source of forecasts, ignoring the impact of market dynamics and internal company changes. It is advisable for investors to conduct a comprehensive analysis using multiple sources of information.

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Zero-Rated Goods

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Zero-Floor Limit

The term "zero-floor limit" refers to a policy whereby merchants are required to obtain authorization for every transaction processed at their store, regardless of its size. By contrast, some stores only require authorization for transactions that are above a certain size, with that size threshold being known as the store's floor limit.

Zero-Floor Limit

The term "zero-floor limit" refers to a policy whereby merchants are required to obtain authorization for every transaction processed at their store, regardless of its size. By contrast, some stores only require authorization for transactions that are above a certain size, with that size threshold being known as the store's floor limit.

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Lisbon Treaty

The Lisbon Treaty, also known as the Treaty of Lisbon, updated regulations for the European Union, establishing a more centralized leadership and foreign policy, a proper process for countries that wish to leave the Union, and a streamlined process for enacting new policies.The treaty was signed on December 13, 2007, in Lisbon, Portugal, and amended the two previous treaties that established the foundation for the European Union.

Labor Intensive

The term "labor-intensive" refers to a process or industry that requires a large amount of labor to produce its goods or services. The degree of labor intensity is typically measured in proportion to the amount of capital required to produce the goods or services: the higher the proportion of labor costs required, the more labor-intensive the business.

Labor Intensive

The term "labor-intensive" refers to a process or industry that requires a large amount of labor to produce its goods or services. The degree of labor intensity is typically measured in proportion to the amount of capital required to produce the goods or services: the higher the proportion of labor costs required, the more labor-intensive the business.

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Fast-Moving Consumer Goods

Fast-moving consumer goods (FMCGs) are products that sell quickly at relatively low cost. FMCGs have a short shelf life because of high consumer demand (e.g., soft drinks and confections) or because they are perishable (e.g., meat, dairy products, and baked goods).They are bought often, consumed rapidly, priced low, and sold in large quantities. They also have a high turnover on store shelves. The largest FMCG companies by revenue are among the best known, such as Nestle SA. (NSRGY) ($99.32 billion in 2023 earnings) and PepsiCo Inc. (PEP) ($91.47 billion). From the 1980s up to the early 2010s, the FMCG sector was a paradigm of stable and impressive growth; annual revenue was consistently around 9% in the first decade of this century, with returns on invested capital (ROIC) at 22%.

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Negotiable Instruments

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