What it calculates

A forecast rollup consolidates departmental or subsidiary forecasts into a single group view, translating foreign-currency entities into the reporting currency and eliminating intercompany transactions so the total is not inflated by internal trade.

How it is calculated

Each contributing unit forecasts in its functional currency. Translation follows the standard convention: income statement items at the average rate for the period, balance sheet items at the closing rate, with the difference landing in a currency translation reserve rather than in profit. Intercompany revenue and the matching cost are then eliminated in pairs, so a sale from one subsidiary to another disappears entirely from the consolidated result.

How to read the result

Reconcile the eliminations: intercompany revenue and intercompany cost should net to zero, and a residual means one side booked something the other did not. Present growth both as reported and at constant currency, because a group can grow in local terms and shrink in the reporting currency purely on rates. Watch which entities drive the variance - a consolidated number that looks stable often conceals one unit well ahead and another well behind.

Worked example

Three units forecast 40,000,000 USD, 25,000,000 EUR and 900,000,000 JPY. At 1.09 and 0.0067 the translated total is 40,000,000 + 27,250,000 + 6,030,000 = 73,280,000. Eliminating 3,500,000 of intercompany sales leaves 69,780,000 consolidated.

Common questions

Which rate should be used for translation?

The average rate for the period for income and expenses, since they accrue throughout it, and the closing rate for assets and liabilities, since they exist at a point in time. Using the closing rate for everything is a common shortcut that misstates revenue whenever rates move during the period.

Why must intercompany transactions be eliminated?

Because the group cannot generate profit by selling to itself. Without elimination, consolidated revenue counts the same economic activity twice and margin includes an internal markup that no external customer ever paid.

What is constant currency growth?

Growth recalculated with the prior period's exchange rates applied to both periods, so the rate effect is removed. It isolates operating performance, which is why companies report it - though it is also easy to lean on selectively when rates are unfavourable.