As a division manager at On Your Mark, you are expected to work with the Finance department to develop financial forecasts for your division.
Complete the following:
1. Prepare a document that explains why forecasting is important to an organization.
2. Explain the forecasting process, compare, and contrast it to the budgeting process.
3. Discuss the role of projected or forecasted (pro forma) financial statements in the budgeting process.
Forecasting especially financial forecasting is an essential tool of planning that helps for budgeting and for estimating future financing requirement. Financial forecasting is a prediction of the future outcome of various business decisions. Financial forecasting is important for any organization. It helps to find out the answer of some question that is important for the organization such as how much profit will organization makes in future, how much products or services organization should produce etc. Financial forecasting helps to identify the right time to change the organization's operations for gather highest benefits (Lasher, 2007). Forecasting is usually based of analysis of past data and future trends.
Forecasting to a certain extent enables organization to prevent losses by making the right decision with the help of relevant information. Forecasting helps to estimate future demand of products or services of a company. Forecasting helps to prevent the company from future losses of time, money, manufacturing and marketing expenditure. Financial forecasting is important from the perspectives of stakeholders of company as well. If the company forecast would differ from the actual results then company may loss the investor's confidence. Financial forecasting helps organization for future planning, setting objectives, and developing courses of action to achieve their objectives. Organization can prevent future losses and increase their future profit with the help of a ...
In about 870 words, including references, this response addresses the concept of forecasting and how it is related to the importance of an organization and financial statements. A thorough discussion is provided.