Most companies understate forecasts


22 Nov 2007

  • Comments

Only one in five companies produce reliable forecasts, and investors respond to forecasting errors by shaving 6% off companies' share price, according to the latest global study commissioned from the Economist Intelligence Unit's survey by KPMG International.

Conversely, firms releasing forecasts which were accurate within 5% had their share price rose by about 46% over the past three years, compared with 34% of others. On average, company projections had been out by 13% over the past three years.

‘Those companies that do meet forecasting targets are high-performing companies able to make better decisions about their future,’ John Herhalt, practice leader, operations improvement, KPMG advisory services, told the Financial Post in Canada.

The technology the companies use worries KPMG as one-third of respondents find the technology to produce their outlooks a ‘notable impediment’, the Financial Post in Canada reports. ‘Nearly all organisations still use spreadsheets for some parts of the process,’ the report noted. ‘More worryingly, however, 40% of them rely solely on spreadsheets to produce the forecast.’

Further reading:

How to unearth buried treasures

UK firms lagging behind on sustainability

Read story in the Financial Post

Visitor comments

blog comments powered by Disqus

Add your comment

We won't publish your address

By submitting a comment you agree to abide by our Terms & Conditions

Your comment will be moderated before publication

  • Send


Financial Planner

The Ministry of Defence Surgeon General’s (SG) Finance Department, Lichfield, Staffordshire, Permanent, Full Time, £ £30,008




Get the latest financial news sent directly to your inbox

  • Best Practice
  • Business
  • Daily Newsletter
  • Essentials


Search for jobs
Click to search our database of all the latest accountancy roles

Create a profile
Click to set up your profile and let the best recruiters find you

Jobs by email
Sign up to receive regular updates with the latest roles suitable for you



Why budgeting fails: One management system is not enough

If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.


iXBRL: Taking stock. Looking forward

In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.