CFA Level I · CFA Level I Exam · Introduction to Financial Statement Modeling
An analyst forecasts a manufacturer's revenue by projecting industry sales from a macroeconomic forecast, then adjusting the company's share using bottom-up information on its new product launches and plant capacity. This method is most likely a:
This is a hybrid approach. The analyst uses a top-down industry forecast from macroeconomic data and then refines the company's share using bottom-up detail such as product launches and capacity. Combining both information sources is what defines a hybrid revenue forecast.
- Ahybrid approachCorrect
- Bpure top-down approach
- Cpure bottom-up approach
Explanation
The method combines a macro-driven industry forecast with company-specific operating inputs. Combining both perspectives is a hybrid approach. Neither a purely top-down nor purely bottom-up method uses both information sets.
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