Question
In: Finance
Why is it so important for companies to have accurate financial forecasts? List and discuss some...
Why is it so important for companies to have accurate financial forecasts? List and discuss some of the impacts inaccurate forecasts have to the company.
Solutions
Expert Solution
Company should be having accurate financial forecast which will be helping the company in order to match the actual performance with the budgeted performance and it will also help the company in reporting lesser of the deviations and establishment of better control mechanism in order to achieve the organisation to maximise the the organisational value and achieve sustainability in the long run.
Company should be having appropriate financial forecast because it will also help the company in determination of selection of various project which are suitable to the need and structure of the company in this short as well as long run so company will be trying to maximize the overall profit associated with the business.
Impact of inaccurate forecast to the company will be inefficiency in achievement of financial objective and it will also lead to selection of bad projects and it will also lead to to liquidity problems and solvency problems so company will be having accurate forecast about various financial elements in order to achieve efficiency.
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