Forecasting: Using Algebra to Make More Efficient Spreadsheets

August A. Saibeni, CPA

Computing budgeted or forecasted volumes for business planning has become relatively easy with the advent of spreadsheet programs. Unfortunately, the ease of using spreadsheet programs can cause users to ignore forecasting methods that may be more efficient than creating large spreadsheet models. Forecasting the growth of business volumes subject to both a population growth factor and an attrition factor is a common real-life example that can require an excessively large spreadsheet if not planned properly. The increased volume associated with the passage of time defines a mathematical series that is often simplified by using a few simple algebraic operations. Many real-life problems are solvable using series analysis methods. One such example is described below.