Enter the previous year’s sales and your average annual growth year to year into the calculator to determine a sales forecast.

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## Sales Forecast Formula

The following formula is used to estimate a sales forecast.

SF = (1 + AGR/100) * PS

- Where SF is the sales forecast for the following year
- AGR is the average annual growth rate in terms of sales percentage growth (%)
- PS is the previous years sales

To calculate a sales forecast, divide the AGR by 100, add 1 to that result, then multiply by the previous years sales.

## Definition

**What is a sales forecast? **

A sales forecast is an estimation of the future amount of sales a company will make in any given period. This can be on a scale of weeks, months, years, or any other time period. The most common forecasts are yearly and quarterly.

In order to make a proper sales forecast, a company must have a history of sales and growth in order to project into the future.

## Example Problem

**How to calculate a sales forecast? **

The following example goes over the necessary steps in order to calculate or estimate a sales forecast.

First, determine the previous year or period sales. In this example, we will look at the last year’s sales. The company we are looking at had a total of $100,000.00 in sales.

Next, determine the average annual growth rate. This can be done by taking the previous 3 years’ sales growth and taking the average. In this example, the average annual growth was 5%.

Finally, calculate the sales forecast for the next year using the formula above:

SF = (1 + AGR/100) * PS

SF = (1 + 5/100) * 100,000

SF = $105,000.00