Absolute Revenue Forecast Error
Are your revenues foreseeable?
Absolute revenue forecasting error is a metric that indicates how variable your revenues are. Since the metric does not account for the direction of the change, this metric should be used more to assess the risk level’ in revenues and not whether or not the revenue targets are being met.
The discrepancy between the forecasted revenues in either direction is a telling sign of business uncertainty. Being able to maximize the foreseeability of revenues makes running a business much more manageable.