P&L Forecast with Historical Growth Rates

In this exercise, you’ll use historical averages to predict future financials—a reliable method for projecting stable, predictable businesses. To forecast the P&L using key assumptions and drivers, follow these steps:1. Begin by identifying your key drivers. These could be sales growth, cost of goods sold, operating expenses etc. Collect historical data on these drivers.2. Next, calculate the average rate of change for these drivers over the past years. This average will be used as an assumption for your forecasts. This method is particularly helpful when historical data shows consistent growth or decline rates, as these averages provide a logical basis for future projections in your income statement forecast. 3. Finally, apply these average rates of change to your existing drivers to forecast your P&L.

Practice P&L Forecast with Historical Growth Rates with interactive Excel modeling exercises in our Financial Statement Modeling module.

This hands-on modeling exercise helps you master P&L Forecast with Historical Growth Rates through real-world Excel practice and financial modeling techniques.