Monte Carlo Business Forecast Calculator

Work out monte carlo business forecast instantly with clear inputs, formula shown and shareable results.

About Monte Carlo Business Forecast Calculator

A Monte Carlo forecast summarised analytically: with a normally distributed outcome, the probability of beating a target is the normal tail above the target, and the confidence interval is the mean plus or minus z times the standard deviation. That gives the same headline figures a simulation reports, without the runs.

Formulas

Probability of exceeding target

P(X > target) = 1 - Phi((Target - Mean) / Standard deviation)

Confidence bounds

Bound = Mean +/- z x Standard deviation, with z = 1.645 at 95%

Worked example

With the default values below, Monte Carlo Business Forecast Calculator returns Probability of meeting or beating the target of 71.07%. Change any input above and every figure here is recalculated in your browser.

Inputs used

Mean forecast outcome: 5,000,000
Standard deviation of the outcome: 900,000
Target or commitment level: 4,500,000
Confidence level for the downside case: 95

Results

Probability of meeting or beating the target: 71.07%
Downside case at the confidence level: $3,519,590.00
Upside case at the confidence level: $6,480,410.00
Shortfall against target in the downside case: $980,410.00

Step by step

1Values used
2Probability of exceeding target
3Confidence bounds
4Probability of meeting or beating the target= 71.07
5Downside case at the confidence level= 3,519,590.00
6Upside case at the confidence level= 6,480,410.00
7Shortfall against target in the downside case= 980,410.00

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

When is the normal assumption unsafe?

When outcomes are bounded, skewed or driven by a few binary events. Then run an actual simulation with the right distributions.

How do I estimate the standard deviation?

From historical forecast error, or by treating the best-to-worst range as roughly six standard deviations as a first approximation.