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A Forecast Is A Prediction of What Is Going To Happen As A Result of A Given Set of Circumstances

Financial forecasting is a vital part of business planning that uses past performance and current trends to predict future performance and help businesses set and meet goals. Financial planning is a long-term process of managing finances to achieve goals while negotiating financial barriers, involving establishing goals, gathering data, analyzing the financial status, developing a plan, implementing it, and ongoing monitoring. Financial planning and forecasting together allow informed decisions by determining strategies and likely sales and costs to create accurate operating budgets.

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Renaliz Gonzales
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285 views

A Forecast Is A Prediction of What Is Going To Happen As A Result of A Given Set of Circumstances

Financial forecasting is a vital part of business planning that uses past performance and current trends to predict future performance and help businesses set and meet goals. Financial planning is a long-term process of managing finances to achieve goals while negotiating financial barriers, involving establishing goals, gathering data, analyzing the financial status, developing a plan, implementing it, and ongoing monitoring. Financial planning and forecasting together allow informed decisions by determining strategies and likely sales and costs to create accurate operating budgets.

Uploaded by

Renaliz Gonzales
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Handling and balancing the company’s financial stability is one of the most challenging part.

Managing
the Cash-In and Cash-Out of the money and the usage of it. How does a company will earn and use all
the assets and liabilities in proper way? Risky isn’t it? That is why every movement and everything has to
be planned and managed properly. Forecast is basically prediction of what is going to happen as a result
of a given set of circumstances. In dictionary the meaning of ‘forecast’ is ‘prediction, provision against
future, calculation of probable events, foresight, prevision’. In business sense it is defined as ‘the
calculation of probable events’. The growing competition, rapid change in circumstances and the trend
towards automation etc. demand that decisions in business are not to be based purely on guess work,
rather on careful analysis of data concerning the future course of events.

Financial forecasting is a vital part of business planning that uses past financial performance and current
conditions or trends to predict future company performance. In other words, financial forecasts are a
tool by which businesses can set and meet goals. A financial forecast is a report illustrating whether the
company is reaching its budget goals and where the company is heading in the future. Financial
Forecasting is beneficial to a company. It helps to achieve and assess the success of your efforts to
determine the long-term viability or value of an activity. Taking control of your cash flow and
purposefully direct your company. It identifies the financial problem areas and their cause and reduces
financial risk to create an environment of certainty and stability.

Financial planning is a process, not a product. It is the long-term method of wisely managing your
finances so you can achieve your goals and dreams, while at the same time negotiating the financial
barriers that inevitably arise in every stage of life. In order to create a sound financial plan, goals must
first be established. Data is then gathered to analyze and evaluate your financial status. Once complete,
your plan can be developed and implemented. Monitoring the plan on an ongoing basis is essential in
order to make necessary adjustments to reach your goals. Financial planning is a continuous process of
directing and allocating financial resources to meet strategic goals and objectives. This can also be
viewed as a single process that encompasses both operations and financing. The operating people
focuses on sales and production while financial planners are interested on how to finance the
operations. The output from financial planning takes the form of budgets.

Financial planning and forecasting are both extremely useful in the creation of an operating budget.
While financial planning helps determine the strategies, goals, and operating procedures for a business,
forecasting helps determine the likely levels of sales and costs for a given time frame. When combined,
financial planning and forecasting allow business owners, shareholders, or board members, to make
informed decisions in nearly any financial aspect. For instance, if it is part of the long-term financial plan
to give each employee a large bonus when they have worked for ten years, forecasting can work these
bonuses into the measurements of cost versus sales, and return an accurate idea of whether the
company will be able to afford bonuses in a given year. By creating a system in which financial planning
and forecasting are measured and analyzed on a rolling, continuous basis, a business can ensure that it
is making financial decisions based on the most up-to-date information.

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