Financial Modeling & Forecasting- Phase 5 – Stochastic Trends, Models, and Smoothing

Deliverable Length: See assignment detail    
Due Date: 2/04/2014 10:00:00 PM  CT [removed]    Please have minum of 3 references!! No plageriasm Please!

Part I

Deliverable Length: 12 slides + title and reference slides, with 150–200 words of speaker notes per slide

Select a Fortune 500 company from the manufacturing sector. Examine the 2 previous years’ financial data, and create a forecast of revenues and expenses for the coming year using the percentage of sales method. To do this, you will need to go to the Security and Exchange Commission (SEC) Web site. Using the stock ticker symbol for that company, access the most recent 10-K summary report. You must also go to the company’s Web site and open its financial statements.

Look at the following areas from that financial data:

  • Detailed budgets
    • Production budget
    • Materials budget
    • Labor budget
    • Overhead budget
    • Cost of goods sold budget
    • Marketing budget
    • Estimated retained earnings budget
    • Change in fixed assets budget
    • Capital expenditures budget
    • Cash budget
  • Financial statements
    • Income
    • Balance sheet

Perform a regression analysis and a sensitivity analysis on the data. Select an appropriate financial model.


Part II

Deliverable Length: 1,200-1,500 words

Explain how autoregression conditional heteroskedasticity (ARCH) and general autoregression conditional heteroskedasticity (GARCH) can be used to smooth out the common problems of autocorrelation found in financial data (ARCH) and variable time lags also found in financial data (GARCH).


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