Examples of Relevant Historical Relationships That Are Useful for Forecasting

question 95

True/False

Examples of relevant historical relationships that are useful for forecasting cash flows include the relationship between fixed and variable expenses and the impact on revenue of changes in product prices and unit sales. If these relationships can reasonably be expected to continue through the forecast period, they can be used to project the earnings and cash flows used in the valuation process. However, it is important to ignore cyclical movements in the data.

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