Відео

@stefity95 - that's odd. See if this link works: www.dropbox.com/scl/fi/wrpwxbfa3o6ndlkgeugta/JBH-2022-Monte-Carlo-analysis.xlsx?rlkey=tpkbm6cg52yoamyi4wdpp5lbj&st=1zm8yvpp&dl=0

@@financialanalysiswithdrjef931It works! Thank you very much!

Is this the one you mean? ua-cam.com/video/5Qhlcw4-67s/v-deo.html

That's the tricky bit! The 'big picture' idea of monte carlo sims is to get a general sense of how sensitive your baseline forecasts are to changes in inputs. You'd think about revenue distributions by looking at the business model and industry conditions, and for longer-term forecasts, macro conditions. Some industries might have a 'winner takes all' dynamic, which would look different to a highly competitive industry. Or sometimes a business might be about to release a product that if successful makes the company, and if not, puts it in trouble. So you need to pick a distribution that most closely matches your view on potential outcomes!

@@financialanalysiswithdrjef931Thank you for the added clarification. So let's say we are following a public company. The company provides guidance for the next two years. I would then possibly set a triangular distribution for these two years. Assuming that I am running monte carlo simulation for the next 10 years, and assuming that the company is in a mature cycle, I would then want to consider for example a lognormal distribution. Is that a reasonable thought process?

@@greensal86 that sounds reasonable. One thing you'd consider in setting the simulation parameters is whether the company's guidance is likely to be optimistic or pessimistic. We know that management forecasts are on average optimistic.

Thank you again!@@financialanalysiswithdrjef931 How do you deal with correlation between the simulated accounts (for example, COGS, CapEx, R&D, etc.) and revenue?

@sethlemoal - that's a great question, and it's the hardest part of this. You need to select a mean and standard deviation that make sense (ie that are plausible). This will come from an understanding of the business that you're looking at, the industry condition it faces (which influence likely growth and profitability). We know that things like sales growth and profitability tend to 'revert to the mean' over time, so an understanding of what is typical for an industry tends to help here. The benefit of doing the Monte Carlo analysis is to get a sense of how much your end result varies as you change these assumptions.

Great suggestion. Yes, I'll be able to do that.

I have put a link to the file in the video description. Here it is: tinyurl.com/bdh7pfr9

thanks