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Finance allah shmoop what Our financial projections Well they're guesses

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okay educated guesses we presume data is assembled reviewed and

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then a crystal ball is gazed into And while projections

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are made in the case of mature companies with long

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cycle businesses the projections are often extremely educated and accurate

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Yeah think about boeing's projected jet engine sales Well the

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company takes three to four years just to set up

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a fabrication run of a new style of engine and

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they're working with rolls royce to do it Rolls royce

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makes jet engines along with cars Their orders come in

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and while they were partly paid for already and the

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company knows it will produce somewhere between two hundred two

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hundred fifty engines next year two hundred fifty two three

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hundred engines following here and three hundred three hundred fifty

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engines the year after that And yes there is some

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variability and revenues But if the company produces fewer engines

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well they'll have fewer costs as well So the range

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they predict for profitability is pretty narrow That is they'll

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have operating profit somewhere between eighty and ninety million bucks

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each year Going up a little bit the next few

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years That's The financial projection anyway can a bomb go

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off in the factory or rather someone is smoking around

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the fuel depot and then you know glam Yep that

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can happen Is it likely No but it can And

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it would really throw off the projections Right So projection

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Is just a projection it's not a guarantee it's a

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guess with other companies while like much younger ones projections

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are well way more of a guess At the other

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end of the rainbow from the boeing rolls royce jet

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engine thing there's a brand new company just called rolls

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it's an e bike company with assisted pedaling so that

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riders feel like they're somewhere between superman and lance armstrong

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You know the steroid guy company has had early success

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having sold two thousand bike models off their website for

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two grand each they're about to raise twenty million dollars

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in venture capital funding Tio go big so now the

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projections get really vague Will the company sell a million

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bikes in three years Well that's what the founders think

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but they're enthused and young for the company only sell

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ten thousand bikes in three years Sure if they meet

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the former projection they're billionaires If they meet the ladder

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they're bankrupt Either way they can project with certainty that

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their outcome begins with a b generally speaking the more

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mature the industry and product the narrower or more accurate

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the financial projection with startups who have no history Well

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one never knows if they're projecting growth in the future 00:02:43.065 --> [endTime] like google or shmoop Come on

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