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Module 4: simple analysis and parsimonious forecasting

Module 4: simple analysis and parsimonious forecasting. International Business Machines Corporation frank huang. Return on Enterprise Operations . Enterprise profit margin reveals how much operating profit the firm earns from each sales dollar.

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Module 4: simple analysis and parsimonious forecasting

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  1. Module 4:simple analysis and parsimonious forecasting International Business Machines Corporation frank huang

  2. Return on Enterprise Operations

  3. Enterpriseprofitmarginrevealshowmuchoperatingprofitthefirmearnsfromeachsalesdollar.Enterpriseprofitmarginrevealshowmuchoperatingprofitthefirmearnsfromeachsalesdollar.

  4. Forecast revenues via forecasts of sales growthrates

  5. Forecast EPAT via forecasts of EPM ForeachdollarofIBMsalesduring2010to2012,thefirmearnedroughly12.9centsprofitafterallenterpriseexpensesandtaxes.

  6. Forecast EPAT via forecasts of “EPMfromsales” • Excludetheimpairmentcharge,discontinuedoperations,financialstatementtranslation,andgains/losesoncashflowhedges • Hopetogainsmootherresults

  7. EPMIndustryAverage

  8. Forecast NEA via forecasts of EATO • Enterpriseassetturnovermeasurestheproductivityofthefirm’senterpriseassets. • Revealsthelevelofsalesthefirmrealizesfromeachdollarinvestedinenterpriseassets. • Foreachdollarofenterpriseassetsemployed,IBMgeneratedanaverageof$14.11insales.

  9. Assumptions for parsimonious forecasting • Sales growth rate 1.13% • Enterprise profit margin (EPM) 15.1% • Enterprise asset turnover (EATO) 14.11

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