Year to date versus full-year forecast: what each number answers
Management usually asks two questions back to back: how much have we done this year, and where will we finish? The first is answered by the year-to-date figure. The second needs a forecast.
Year to date is what has already happened
YTD is the sum of a flow, such as revenue, cost or profit, from the first month of the financial year to the month selected.
In the example revenue to the end of August is THB 81.1m, against a budget of 85.2m for the same months.
Where a workbook has a reporting-month selector, the year-to-date formulas should refer to it. Changing the month then recalculates the totals without touching a formula.
Year to date applies to flows only. Cash, receivables and inventory are balances at month end; adding several months of them together produces a number that means nothing.
The full-year forecast is actuals plus what is still to come
This set calls the second part the Latest Estimate.
The example has closed August, so it takes January to August as actuals and adds an estimate for September to December. That gives full-year revenue of THB 129.6m against a full-year budget of 136.1m.
Full-year net profit is expected at THB 19.5m against a 23.3m budget. That pair is what answers whether this year's target is still within reach.
Forecast and budget do different jobs
The budget is set once, before the year starts, and is usually what the team is measured against. The latest estimate can change every month as new information comes in.
Rewrite the budget to match the forecast each month and the variances vanish, taking with them any record of how far the business has drifted from the original plan. Many companies therefore keep both and report three columns: actual, forecast and budget.
The decision for the meeting is whether the budget remains the target, or the new forecast becomes the number everyone plans against.
Three common misreadings
A year-to-date margin is year-to-date profit divided by year-to-date revenue, not an average of the monthly margins.
A full-year forecast is not an achieved result. When presenting it, make clear which part is actual and which part is assumption.
Check which period each column covers. In the sample forecast report revenue and profit in the summary are full year, while operating cash flow of THB 5.993m and CAPEX of 3.3m cover September to December only.
When a view to December is not enough
A full-year forecast only looks as far as December, so the closer the year end, the shorter the view. To always see twelve months ahead, use a rolling forecast.
The figures above come from the P&L Budget vs Actual guide and the Forecast & Outlook guide.
Common questions
What is the difference between YTD and FY?
YTD runs from the start of the year to the selected month. FY is the whole financial year, January to December in the example, so any FY figure produced during the year includes an estimate.
Should the budget be changed to match the latest forecast?
Usually not. The budget is the agreed yardstick, and rewriting it removes the variance. Keep both and report them side by side; formally changing the target is a management decision.
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Figures in the articles are synthetic sample data, used to show the method. They are not a real company's results.
