How to Forecast operating profit margin for service companies?
How can we forecast segment operating profit margin for service companies which have multiple segments? Is there any way to forecast using historical operating margins? For example, if need to forecast operating margin for 4th quarter, is it okay if i calculate it by averaging operating profit margins of last 3 quarters? And if i need to caclulate annual operating profit margins, can i calculate it by averaging annual operating profit margins of last 3 years?
Shokhrukh_96, sorry about the lack of response. Maybe one of these topics will help:
If we're lucky, the following pros may have something to say: Dollarfor60Cents ModelThis Beth-Reed
Hope that helps.
For simplicity's sake, yes you can just average the past to look into the future, especially if you don't expect big changes in business mix or operational improvements.
If you are betting on a change in mix of business revenues or margin improvement in a segment, you should break down the margins for each segment and create a blended average.
Ea vero dolorem asperiores ab nulla odit quos. Dignissimos beatae aut optio veniam sed. Nihil ipsam eos excepturi nemo est modi.
Amet veritatis officiis libero labore. Perferendis dicta veniam aliquid omnis nisi. Et vel ea enim vel exercitationem excepturi. Cumque quam harum enim explicabo rerum. Impedit quidem nihil dicta odio quisquam. Ut rerum hic omnis sequi neque id quod.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...