From the course: Financial Analysis: Making Business Projections
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Projecting variable OPEX - Microsoft Excel Tutorial
From the course: Financial Analysis: Making Business Projections
Projecting variable OPEX
We are now left with projecting variable operating expenses. Before completing our bottom-up PM projection. As mentioned earlier, most of your variable costs should be part of COGS. And therefore already accounted for in your gross margin. Whatever variable costs are left, will appear under Opex. A simple and efficient way to project variable Opex is to tie it to your revenue projection. To do that, we first need to get an understanding of how much variable Opex we have for each dollar of revenue we've generated. That way, based on our revenue plan for the coming year, we can evaluate what should be the resulting variable Opex. To do so, let's take the previous year as a baseline. In your Opex data set, just select the remaining expenditures that did not get classified as fixed Opex. Or exceptional Opex. And divide that number by your revenue for the same year. If, for example, you have $10,000 of variable costs for the best year. For a revenue of one million dollars. Then you have…
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