Title: How the Confidence Interval Affects Business | Small Business - Chron.com
Headings: How the Confidence Interval Affects Business
How the Confidence Interval Affects Business
Confidence Intervals
Market Research
Risk Management
Budget Forecasting

Content: By using a confidence interval, the company can determine the range its sales are likely to fall. Risk Management
Because it is impossible to predict a future event with 100 percent accuracy, confidence intervals are used by businesses to manage risk. For example, if a company is 95 percent confident that sales in the next period will be between 5 million and 6 million units, there is still a 5 percent chance that they will be above or below that number. By understanding how likely a given risk is to occur, the business can manage the risks of a non-occurrence accordingly. Budget Forecasting
When a business forecasts a budget for a fiscal period, it will need to estimate both revenues and costs. If a company is significantly off the mark on either estimation, it could get in financial trouble. By using a range of possible values for revenues and costs and finding the confidence interval of those values, a business can have the information it needs to make important financial decisions while still being able to reasonably prepare for the possibility that its estimates may be incorrect. ‒‒:‒‒
/
‒‒:‒‒
Replay
Skip
Ads by
Read More
References
Reference for Business: Confidence Interval
University of Iowa: Confidence Intervals
Yale University: