🔎 How to know if a company’s projection makes sense

When we do a valuation, one of the first things we ask for is the company’s forecast — usually a 5-year outlook of revenue, costs, and profit.

But how do we know if those numbers are realistic?

We need to see the backup. For example:

• If sales are projected to grow by XX%, can the factory actually handle that capacity?
• Will they need new investments, and how much?
• Do they need to hire more staff to support the growth?
• If revenue grows, it’s not just cost of goods sold that increases — selling and admin expenses usually go up too.

On top of that, we check:

• Past performance – have they ever achieved that level of sales before?
• Industry outlook – are analysts expecting the sector to grow, and by how much?

The numbers don’t have to be exact, but at the very least, they need to make sense and be aligned.

💡 At ORNA, we turn projections into insights.
If you’re buying, investing, or valuing a company, let’s talk.

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