Question
Why do analysts examine DSO, DOH, and DPO when building forecasts?
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Answer
They link working capital needs to operating activity and cash conversion.
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Question
In a pro forma forecast, which assumptions usually drive revenue most directly?
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Answer
Unit volume, selling price, segment mix, and market share.
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Question
How do fixed costs and variable costs affect earnings when revenue changes?
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Answer
Variable costs move with sales; fixed costs create operating leverage in profits.
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Question
In forecasting, what is the role of a base-case scenario?
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Answer
It is the most likely primary forecast.
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