Financial Forecasting
financebusiness planninginvestment analysisentrepreneurshipoperations
What Is Financial Forecasting?
Estimate future financial outcomes by using historical information, assumptions, trends, and known changes in revenue, costs, or cash requirements.
Why Does Financial Forecasting Matter?
Financial Forecasting matters because decisions about hiring, spending, investment, and growth depend partly on what resources are likely to be available later.
What Does It Look Like?
Someone applying financial forecasting may:
- •states the assumptions behind a forecast
- •separates known commitments from uncertain estimates
- •compares actual results with forecast values
- •updates the forecast when a material assumption changes
How to Develop Financial Forecasting
You can develop it by:
- •build a simple monthly forecast from real historical figures
- •create best-case, base-case, and downside assumptions for one uncertain variable
- •review forecast versus actual and identify the largest source of error
Where Can Financial Forecasting Be Useful?
Financial Forecasting can be useful in areas such as:
financebusiness planninginvestment analysisentrepreneurshipoperations
Careers Where This Skill Can Be Useful
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