Company actuals and forecasts: fix period and source errors

Keep reported actuals, calculations from those actuals and forecast assumptions in separate parts of a company model. For every imported number, identify the fiscal period, units and source table before using it. The most damaging errors often come from treating a year-to-date flow as a quarter, mixing millions with thousands or placing an estimate in the historical columns.

Start with the filing and the period shown in the table

Read the statements and notes in the company's primary filing. Investor.gov explains the contents of Forms 10-K and 10-Q. Other issuers may use different filing forms and accounting frameworks. Use the actual fiscal dates; a fiscal quarter does not necessarily match a calendar quarter.

Record the reported label as well as your model label. “Cash and cash equivalents” is not automatically unrestricted excess cash, and “total debt” may require combining several reported lines. Read the associated notes before making that mapping. A source located on the same company's website does not establish that it supports the line you imported.

Derive a quarter from compatible cumulative flows

The following figures are invented to demonstrate period arithmetic, in $ millions for one fiscal year and one unchanged reporting scope. They are not results for a named company.

The quarters sum to 300. Subtracting the standalone Q2 value of 70 from nine-month revenue of 210 gives 140, not Q3. The subtraction must remove the entire earlier cumulative period. Apply the same logic to cumulative cash-flow amounts only after checking comparable classification and scope.

In Excel, if cumulative revenue is B2:B5, Q1 in C2 is =B2, Q2 in C3 is =B3-B2, and the next quarters follow that difference pattern. A check such as =SUM(C2:C5)-B5 should equal zero. This verifies the arithmetic; the labels and source periods still need to be correct.

Do not subtract balance-sheet stocks to invent a quarter

Suppose cash is $45 million at the nine-month date and $50 million at year-end. The $5 million difference is a change in the cash balance, not “Q4 cash.” It may reflect operating, investing, financing and currency effects. The year-end cash input is $50 million. By contrast, annual operating cash flow of $60 million less comparable nine-month operating cash flow of $42 million gives $18 million for the fourth quarter.

That stock-versus-flow distinction is described in the SEC financial-statement guide. It also explains why revenue can be summed across quarters while closing cash should be taken from the relevant date.

Keep restated comparatives together

In a separate revision example, an earlier source reported nine-month revenue of $180 million and six-month revenue of $110 million, giving Q3 of $70 million. A later source revises both cumulative figures:

Using revised 186 with old 110 produces 76 and overstates the revised quarter by $4 million. Preserve which filing supplied each value, then use a compatible set. Do not overwrite one comparative silently or fill an unavailable one with zero. A missing comparable period is a data gap to resolve.

Make the forecast boundary unambiguous

After the last accepted actual period, start a separate forecast series. If the historical annual revenue is $300 million and your assumed next-year growth is 8%, the forecast is $324 million. The 8% is your assumption; $324 million is a derived forecast. Neither becomes company guidance because it sits beside a reported number.

For management guidance, preserve the actual source date, measure, period and range. A company may guide an adjusted metric that differs from the historical line in your model. Do not treat the midpoint of an adjusted range as a reported GAAP actual. The DCF guide uses the resulting forecasts as assumptions, and the model review checklist shows how to catch period, unit and cash-link errors before relying on the output.