Question

Discuss and explain why future potential sales are an important input an organization's long-term financial planning

Answer 1

Long-term financial planning is very much depend on potential sales of an organization. As we know that potential sales is the base for future possible revenue and long-term planning can not be made without revenue.

Long-term financial planning is associated with the management of finance in long-period. Management of finance means raising & utilization of funds in long-term. We are aware that requirements of long-term finance will depend on the potential sales amount. If a firm & company is expecting high quantity of sales in future then requirements of funds in that long-term period will be higher or vice versa. So it is clear that long-term financial planning definiitely will depend on the potential sales for the long-term period.

It is clear that before making a proper long-term financial planning, a firm & company has to make good estimations about potential sales for coming period because whenever a firm & company has made goood & fair sales forecasting then firm can make proper & fair long-term financial planning.