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How do firms derive the financing needs

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There is a great confusion when people talk about financial forecasting. Financial forecasting at a firm's level is about determining the financing needs of the firm over the near' medium and long future.

Where do these needs emanate from? How do firms derive the financing needs? What are the main differences between the financing needs of a new firm or a new venture and those of a firm that 'has been around for a long time'?

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Solution Summary

There is a great confusion when people talk about financial forecasting. Financial forecasting at a firm's level is about determining the financing needs of the firm over the near' medium and long future.

Where do these needs emanate from? How do firms derive the financing needs? What are the main differences between the financing needs of a new firm or a new venture and those of a firm that 'has been around for a long time'?

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These financial needs emanate from the strategic planning of the firm in terms of future expansion, growth plans, sales forecasts, and capital budgeting projects planned by the firm. Firms derive the financing needs by adopting various forecasting methodologies. This may range from trends analysis of the historical financial needs, to ...

Solution provided by:
Sheetal Jain, PGDM
Education
  • BComm, University of Delhi
  • Post Graduate Diploma in Management (Equivalent to MBA), All India Management Association
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