What Is Financial Planning and Forecasting?

Financial forecast is based on historical data of financial activities, taking into account realistic requirements and conditions, and making scientific predictions and calculations of future financial activities and financial results. The purpose of financial forecasting is to measure the economic benefits of various investment and fundraising schemes of enterprises, to provide a basis for financial decision-making, and to estimate the financial income and expenditure (cash flow) for the development and change of financial assets and to prepare financial plans.

finance prediction

Prediction is made

The purpose of forecasting is to reflect the advancement of financial management, that is, to help financial staff understand and control the future

Financial forecasts can be classified into different categories with different signs:

1. According to the prediction object, it is divided into

Financial forecasts are generally carried out according to the following procedures:

Clear predictions and goals

The financial forecast must first define the forecast target and target, and then can determine the scope and time of the forecast based on the forecast target, content and requirements.

Develop a forecast plan

The forecast plan includes the organizational leadership, personnel arrangements, work progress,

Financial Forecast Yes

Financial forecasting plays a very important role in improving the company's management level and economic benefits. The specific manifestations are as follows:

1. Financial forecasting is an important basis for operating decisions.

The key to management is

Continuity principle

Financial forecasts must be continuous, meaning that forecasts must be based on past and present financial information

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Basic structure of financial forecasting model

Financial forecasting models are generally divided into: 1) assumptions; 2) calculation pages and results pages. The purpose of financial forecasting is that the company is developing

1. When the financial department makes financial forecasts, it must scientifically apply various methods to make the forecast results more real, accurate, and more in line with reality.

2. Make full use of forecasting in all future financial activities with uncertainties, so that decision makers can be sure of what they know.

3. Combining qualitative financial forecasting methods with quantitative financial forecasting methods, we must not only do a less demanding forecasting based on experience and surveys, but also use mathematical methods based on relatively complete financial data to develop future financial development. Make quantitative estimates.

4. Pay attention to long-term, medium-term,

China's financial forecast has not been widely used. At present, laws and regulations generally only require companies applying for public offering of stocks to provide profit forecasts, but there are no corresponding rules and guidelines for the procedures, methods, specific requirements, etc. for preparing profit forecasts; the scope of forecasts is mainly profit forecasts, not Comprehensive financial forecasting; the auditing of profit forecasting mainly audits the basic assumptions of the forecast, the accounting policy chosen, the basis of the forecast preparation and the calculation method, and does not assume audit responsibility for the accuracy of the forecast. The specific performance is as follows:

1. Financial forecasting system is not perfect

At present, China has not established an effective financial forecasting system. Only listed companies have the requirement to disclose financial forecasting information-profit forecasting, but it is not required to reflect it in a report format. Independent expert forecasts and voluntary forecasts do not exist. The financial forecast information disclosed is mainly mandatory forecast information.

2. Imperfect financial forecasting regulations

In China, only the profit forecast of the "Regulations on the Contents and Formats of Information Disclosures of Publicly Offered Stock Companies" issued by the China Securities Regulatory Commission, "Contents and Forms of Prospectus," is only required for the financial forecast. There are compulsory requirements for the determination and disclosure of forecast information, and other conditions such as cash flow and asset liability are not further stipulated; there is no further requirement for voluntary disclosure of financial forecast information in annual reports; China's corporate accounting system and Specific accounting standards also do not regulate the financial forecast accordingly. Compulsory prediction cannot be effectively guided, and it does not serve as a guide for independent expert predictions and voluntary predictions.

3. Irregular financial forecasting behavior

Because China's effective financial forecasting system has not yet been formed. In addition, the financial forecasting regulations are not complete. For their own benefit, it is inevitable for companies to deliberately distribute untrue financial forecasting information. Because the forecasting information itself has future uncertainty, the information is asymmetric In this environment, it is easy to produce information manipulation and even securities fraud. This has been confirmed by foreign and Chinese securities markets.

4. Incomplete financial forecast

At present, China's financial forecast only requires the provision of profit forecast information, and does not require the provision of cash forecast information. From the perspective of the importance of the information, it is difficult to distinguish between cash information and profit information. Market economic conditions in which domestic and foreign markets are increasingly competitive It is difficult to fully evaluate the time, amount and uncertainty of a company's cash flow based on profit forecast information alone. Because profitability is only a factor that affects cash flow, only a set of financial forecast reports can be used to satisfy information users Requirements.