show me how to work a forecast personnel expenses & total revenues using weighted moving averages & moving averages using 3 fiscal years
To work a forecast of personnel expenses and total revenues using weighted moving averages and moving averages using three fiscal years, follow these steps:
1. Gather the historical data: Collect the personnel expenses and total revenues for the past three fiscal years. For example, if the fiscal years are 2018, 2019, and 2020, you would need the data for each year.
2. Calculate the simple moving average: Start by calculating the simple moving average for each data point by summing up the values and dividing them by the number of years. For example:
- Simple Moving Average (SMA) for personnel expenses = (Personnel expenses of Year1 + Personnel expenses of Year2 + Personnel expenses of Year3) / 3
- SMA for total revenues = (Total revenues of Year1 + Total revenues of Year2 + Total revenues of Year3) / 3
3. Calculate the weighted moving average: Assign weights to each year's data based on their relative importance or significance. For example, if you believe the most recent year is more relevant, you can assign a higher weight to it. The weights should add up to 1. Calculate the weighted moving average using the formula:
- Weighted Moving Average (WMA) for personnel expenses = (Weight1 * Personnel expenses of Year1) + (Weight2 * Personnel expenses of Year2) + (Weight3 * Personnel expenses of Year3)
- WMA for total revenues = (Weight1 * Total revenues of Year1) + (Weight2 * Total revenues of Year2) + (Weight3 * Total revenues of Year3)
4. Apply the moving averages to forecast: Once you have calculated both the simple moving average and the weighted moving average, use them to forecast the personnel expenses and total revenues for the next fiscal year. This can be done by averaging the moving averages or applying the last moving average directly as the forecasted value.
5. Evaluate and adjust the forecast: Compare the forecasted values with actual figures for the next fiscal year. If there are significant deviations, you may need to adjust the weights or consider other factors that may affect the forecast.
Remember that the selection of weights and the method of forecasting depend on the specific context and assumptions you make. Adjustments and refinements may be needed to improve the accuracy of the forecast.