FORECAST Function
Calculates a future value using existing values
Calculates a future value using existing values
The FORECAST Function is categorized under Statistical functions. It will calculate or predict a future value using existing values.
In financial modeling, the FORECAST function can be useful in calculating the statistical value of a forecast made. For example, if we know the past earnings and expenses, we can forecast the future amount using the function.
=FORECAST(x, known_y’s, known_x’s)
The FORECAST function uses the following arguments:
As a worksheet function, FORECAST can be entered as part of a formula in a cell of a worksheet. To understand the uses of the function, let us consider an example:
Suppose we are given earnings data, which are the known x’s, and expenses, which are the known y’s. We can use the FORECAST function to predict an additional point along the straight line of best fit through a set of known x- and y-values. Using the data below:
Using earnings data for January 2019, we can predict the expenses for the same month using the FORECAST function.
The formula to use is:
We get the results below:
The FORECAST function will calculate a new y-value using the simple straight-line equation:
Where:
and:
The values of x and y are the sample means (the averages) of the known x- and the known y-values.
Click here to download the sample Excel file
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