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Profit Forecast Model Using Monte Carlo Simulation in Excel

Author

Listed:
  • Petru BALOGH

    („Dimitrie Cantemir” Christian University)

  • Pompiliu GOLEA

    („Dimitrie Cantemir” Christian University)

  • Valentin INCEU

    („Dimitrie Cantemir” Christian University)

Abstract

Profit forecast is very important for any company. The purpose of this study is to provide a method to estimate the profit and the probability of obtaining the expected profit. Monte Carlo methods are stochastic techniques–meaning they are based on the use of random numbers and probability statistics to investigate problems. Monte Carlo simulation furnishes the decision-maker with a range of possible outcomes and the probabilities they will occur for any choice of action. Our example of Monte Carlo simulation in Excel will be a simplified profit forecast model. Each step of the analysis will be described in detail. The input data for the case presented: the number of leads per month, the percentage of leads that result in sales, , the cost of a single lead, the profit per sale and fixed cost, allow obtaining profit and associated probabilities of achieving.

Suggested Citation

  • Petru BALOGH & Pompiliu GOLEA & Valentin INCEU, 2013. "Profit Forecast Model Using Monte Carlo Simulation in Excel," Romanian Statistical Review, Romanian Statistical Review, vol. 61(12), pages 33-40, January.
    • Handle: RePEc:rsr:journl:v:61:y:2013:i:12:p:33-40
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    Cited by:

    1. Teodora Maria SUCIU (AVRAM), 2020. "Possibilities Of Evaluation Of The Expenditure Of The Clothing Industry By The Monte Carlo Method," Contemporary Economy Journal, Constantin Brancoveanu University, vol. 5(3), pages 29-37.

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