Planning under Uncertainty
Let’s say that the board have sketched a future desired value of the company’s equit, and that you are left to find out if it is possible to get there and if so – the road to take …
Let’s say that the board have sketched a future desired value of the company’s equit, and that you are left to find out if it is possible to get there and if so – the road to take …
We know that forecasts based on average values are on average wrong. In addition will deterministic models miss the important uncertainty dimension that gives both the different risks facing the company and the opportunities they bring forth.
We believe you know your business best and will in your capacity implement the necessary resources, competence, tools and methods for running a successful and efficient organization.
Still issues related to uncertainty …….
The uncertainty about the future yearly Pax is quite high. With this as the backcloth for airport planning the stochastic nature of Pax forecasts has to be taken into account when investment decisions are to be made.
Calculating Wacc for a company for a number of years into the future is not a trivial task. Wacc is no longer a single value, but a time series with values varying from year to year.
Certain or Uncertain You may know the values your variables will take in the time frame of your model — they are certain, or what statisticians call “deterministic”. Conversely, you may not know the values they will take — they are uncertain, or “stochastic”. If your variables are uncertain you will need to describe the […]