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Arez

on Sep 04, 2019

Global

Question about

What additional check should we perform to verify if our estimated earnings are realistic?

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Marco-Alexander

Coach

edited on Sep 05, 2021

Former BCG | Case author for efellows book | Experience in 6 consultancies (Stern Stewart, Capgemini, KPMG, VW Con., Hor

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Ivan

on Sep 05, 2019

Calculate historical ratios (earnings to sales, gross margin, operating margin, earnings per unit sold ...) and compare them against the forecasted ratios. Ceteris paribus, the forecasted ratios shouldn't devate much from the historical ones.

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Artur R.

on Sep 06, 2019

If it is a Market Size case, and the context about "guesstimates" (i think it is). First of all, you need to reconcile your answer (est. earnings) to baseline from which it was derived. Example: what % does estimated earnings take from total earnings? Secondly, - as i understand, you're always expected to provide recommendations how to make your estimation more relevant. I don't understand how it is possible to start calculate historical ratios on the case interview.