Baseline

Definition: A starting point for comparisons. It’s usually your best estimate before determining other alternatives.

Example: A baseline scenario is often a cash flow or income calculation based on current or expected conditions.

Why It’s Important: Every decision is a choice between at least two options. You often compare the baseline scenario to alternative scenarios. These scenarios provide information for you to pick the best decision. If might be the baseline scenario but one of the alternative scenarios may be better.