What is financial planning and forecast?

Financial planning and forecasts are interconnected financial procedures that help the company determine operations, create adequate expectations and measure actual performance against the set goals. Financial planning and prognosis are managed constantly or regularly, as the constant accumulation of new data can affect long -term strategies and goals. Like navigation tools on the boat, businesses need good financial planning and predicting skills to orient the organization and set a course for the future.

Wide concept, financial planning covers the whole financial concerns and operations of the company. Some of the concepts involved in financial planning include budgeting, accounting methods, creating sales goals and analysis of financial performance. Because it is such a wide topic, financial planning is often divided into more manageable divisions, such as short -term, medium and long -term goals. Using these time frames financial plans help the company set appropriate goals, includePrecise and reliable financial management strategies and create mechanisms for performance analysis against set goals.

The prognosis is an important segment of financial planning. Using historical data and market analysis, the forecast helps to set up adequate targets for income and costs. For established business, the market forecast will usually consider how business is carried out last year, how other market companies, the state of the economy and the level of demand. These factors can then be made by various statistical equations to create a forecast that can be used in financial planning. The cost forecast will consider how fixed costs such as rent, which are likely to change, as well as variable costs such as wages, services and supplies to help create COSTS for the coming year or a specified period of time.

Financial planning and forecasts are very useful in creating operationalthe budget. While financial planning helps to determine strategies, goals and operational procedures for the company, the forecast helps to determine the probable level of sales and costs within a given time frame. Financial planning and forecasts allow owners of companies, shareholders or members of the Board of Directors to make the decisions informed in almost any financial aspect. For example, if it is part of a long -term financial plan to give each employee a large bonus when he has been working for ten years, the forecast can work these bonuses to measure the cost of Versus sales and return the exact idea of ​​whether the company can afford bonuses in that year. By creating a system in which financial planning and predictions is measured and analyzed, the enterprise can ensure that the financial de secure the most recent information.

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