Question

What is the GOAL of the financial forecasting process for a start-up business? That it, what is the business “forecasting”, and why is the information derived from the forecast important?

Answer 1

Normally financial forecasts are for the public listed company .Financial forecasts assist you to meet your business goals.The Financial forecasting term is also known as pro forma — forecasting because here you are referring to a forward-looking financial expectation on all three Pro-forma Income statements, Cash flow, and Balance sheet.Pro-forma forecasting estimates an organization’s future financial outcomes by analyzing historical data.Financial forecasting allows management teams to expect outcomes based on previous financial data.The purpose of a forecast is to inform and assist the management in decision-making.

business forecasting :

Because Pro-forma statements are presented in a standardized, columnar format, management utilizes them to evaluate and contrast other business plans.By organizing the data to the financial and operating statements side-by-side, management analyzes the projected consequences of competing plans in order to choose which best serves the interests of the company.

Forecasting is important because investors utilize forecasting to determine if events affecting a company, such as sales expectations, will increase or decrease the price of shares in that company. Forecasting also provides an important benchmark for firms, which need a long-term perspective of operations.