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Can the accrual reversal method of forecasting be used in the long-term, or is it strictly a short-term method?


Michael Dunn
Title: Director of Finance
Company: CaliCo Design
(Director of Finance, CaliCo Design) |

Actually, ARM is better used for medium-term forecasting. Applying the accrual reversal method in the short term (less than one year) would be a bit excessive and unnecessary, because of the statistical nature of this method. A typical ARM model has 5-year monthly simulation and forecast (usually 3 prior, the current and next years). That information feeds to three one-year daily templates (prior, current and next).


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