As a division manager at Abel Athletics, you are expected to work with the Finance Department to develop financial forecasts for your division. Prepare a document that explains why forecasting is important to an organization. Explain the forecasting process, compare, and contrast it to the budgeting process. Discuss the role of projected or forecasted (pro forma) financial statements in the budgeting process.
Describe the financial statement forecasting process.
Forecasting is the process by which companies prepare themselves for the future. It includes prediction of the future outcome of several business decisions. The process comprises the future of the business as a whole, the future of a product or product line and the future of the industry in which the business operates (Forecasting, 2008). Financial forecasting is important for organization for several reasons:
- In order to reap the greatest benefits, it allows management to change procedures at the right time.
- It also helps the company to prevent losses by making the proper decisions that are based on selective information.
- It helps the top management to decide whether the product or product line will be successful (Forecasting, 2008).
- Forecasting prevents the company from spending time and money on manufacturing and marketing a product that will not make the grade in the future. .
- It provides a solid base for the determination of future policies.
- It helps to minimize the future business risks and uncertainties.
- It helps the organization to achieve objectives of profit maximization.
- It gives a pre-indication about the future economic conditions.
The forecasting process focuses by determining how data will be assembled and reconciled into a consistent picture of the future (Forecasting ...
The response is a discussion of the forecasting process, including ideas of why it is important and comparison to the budgeting process in 869 words with references.