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Click To Edit Master Title Style Financial Forecasting: Presented by Sushant Jondhale Sushma Patel Swastik Sam

The document discusses financial forecasting, which involves estimating how a business will perform financially in the future. It notes that financial forecasting is critical for budgeting and should precede it. The document outlines different approaches to financial forecasting such as historical and research-based forecasts. It provides examples of forecasts for new businesses including sales forecasts broken down by category. The document stresses the importance of including forecasts for all three financial statements: the income statement, cash flow statement, and balance sheet. It describes what each financial statement shows in a forecast and their importance for evaluating different financial aspects of a business.

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Swastik Sam
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49 views

Click To Edit Master Title Style Financial Forecasting: Presented by Sushant Jondhale Sushma Patel Swastik Sam

The document discusses financial forecasting, which involves estimating how a business will perform financially in the future. It notes that financial forecasting is critical for budgeting and should precede it. The document outlines different approaches to financial forecasting such as historical and research-based forecasts. It provides examples of forecasts for new businesses including sales forecasts broken down by category. The document stresses the importance of including forecasts for all three financial statements: the income statement, cash flow statement, and balance sheet. It describes what each financial statement shows in a forecast and their importance for evaluating different financial aspects of a business.

Uploaded by

Swastik Sam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Click to edit

Financial Master title style


Forecasting
Presented By
Sushant Jondhale
Sushma Patel
Swastik Sam

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Click to edit Master title style
Introduction
• Definition: Financial forecasting is the process of
estimating or predicting how a business will perform in
the future. The most common type of financial forecast
is an income statement, however, in a complete financial
model, all three financial statements are forecasted.
• Financial forecasting is a critical first step in the
budgeting process. Organizations that work hard to
create reliable financial forecasts are more likely to build
realistic budgets. Financial forecasting should always
precede the budgeting process to ensure spending is in
line with factors that can impact overall financial
performance. Those who create budgets without
financial forecasts are at risk of overspending and not
having enough available cash for unexpected costs or
shortfalls in revenue. Lacking a forecast may also keep
the business from greenlighting a new capital
investment or launching a product that may have ended
up being a growth driver.

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Click toofedit
Types Master title
approaches style
to financial forecasting

• A financial forecast is meant to give


you a rough estimate of the direction
of the business in financial terms.
Your estimates say, “this is what the
future is likely to look like for our
business.”

• Historical financial forecast.

• Research-based financial forecast.

3 3
Click to edit
Financial Masterexamples
forecast title stylefor new businesses
The sales forecast is used to estimate the
company's turnover. It is generally presented by
category of products and services, types of
customers, or time slots.

In our financial forecast example, we have included


a sales forecast for a hostel, organized by
categories of services with the bed's occupancy
forecast broken down based on seasonality.

To ensure a fair and realistic evaluation of your


company's revenues, You will need to base your
forecast on thorough and reliable market analysis,
including an analysis of what your competition
offers. You will also need to think carefully about
your pricing policy and distribution strategy
beforehand.

4 4
Click to edit
Examples Master title
of financial style
statements to include in your forecast

• Forecast need to include 3 financial


statements:

• The P&L statement.


• The cash flow statement.
• The balance sheet.

5 5
Clickstatement
P&L to edit Master title style
The profit and loss statement enables you to assess:

• The growth of the company by analyzing the evolution of


the turnover over several years;
• The profitability of the company by looking at the
difference between the expected revenues and the costs
which will need to be incurred to generate these sales.
The main shortcoming of the projected income statement is
that it does not take into account cash flows. Your profits
should turn into cash at some point, but based on when your
clients pay you, how much inventory you keep, or when you
pay your suppliers, the cash flow could be very different from
your profit.
To overcome this shortcoming, we need to look at the
forecasted cash flow statement included in our financial
forecast example.

6 6
Click flow
Cash to edit Master title style
statement
• The cash flow statement shows all anticipated
cash movements for a given year.
• It enables you to evaluate:

• the ability to generate operating cash flow;


• the company's investment and financing policies.

• The cash flow statement is highly complementary


to the P&L statement. Together they provide a
clear view of the company's profitability, the cash
generated by the operations, the investments
made and the financing flows.

7 7
Click to edit
Balance sheetMaster title style
The forecasted balance sheet, the
last link in the chain, provides an
overview of the company's net
worth at a given moment in time
and is part of our financial forecast
example. It enables you to
evaluate:

• The value of the company's


assets;
• The weight of its working
capital;
• The level of financial
indebtedness;
• The book value of shareholders'
equity.

8 8
Click to edit Master title style

Thank You

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