Financial Forecast

Financial Forecast

Mark Rais

Axia College of University of Phoenix

Financial planning is a continuous process of directing and allocating financial resources to meet strategic goals and objectives. The foundation for Budgeted Financial Statements is Detail Budgets. Detail Budgets include sales forecasts, production forecasts, and other estimates in support of the Financial Plan. Collectively, all of these budgets are referred to as the Master Budget.

Financial planning can be broken down into planning for operations and planning for financing. Operating people focus on sales and production while financial planners are interested in how to finance the operations. Financial Planning starts at the top of the organization with strategic planning. Since strategic decisions have financial implications. Strategic planning is a formal process for establishing goals and objectives over the long run. Strategic planning involves developing a mission statement that captures why the organization exists and plans for how the organization will thrive in the future.

Brand new company: needs financial forecast so that it can cover its big initial costs such as acquiring new assets. Sales also need to be forecasted in order for the firm to see how soon they can recover from negative net incomes Any investor wants to know how hard they can expect their money to work before investing in any business. It also sets a productivity target for employees

Family owned company: The family owned company will need a financial forecast so that they will know when the company should consider going public. At the very least, the family that owns the company wants to make sure they will be able to eat in the next month, quarter, or year if their sole source of income is that business. It also keeps the employees informed of current market conditions....