Financial Forecasting

Financial Forecasting describes the process by which firms think about and prepare for the future. The forecasting process provides the means for a firm to express its goals and priorities and to ensure that they are internally consistent. It also assists the firm in identifying the asset requirements and needs for external financing.

The main driver of a forecasting process is generally the sales forecast. Since most balance sheet and income statement accounts are related to sales and variable costs, the forecasting process can help the firm assess the increase in current and fixed assets which will be needed to support the forecasted sales level. Similarly, the external financing which will be needed to pay for the forecasted increase in assets can be determined.

Firms also have to manage working capital and select goals related to capital structure (the mix of debt and equity used to finance the firmĀ“s assets), and dividend policy. Therefore, the forecasting process allows the firm to determine if its forecasted sales growth rate is consistent with its desired Capital Structure and Dividend Policy.

 Financial statements and cashflow integrity is a must, level of detail can be certainly an issue, software models have to have the capacity of managing lots of information and calculation speed for quick answers to management queries and analysis. A specialized solution design calls for efficient use of matrices, categories, accounts and formulas with auditing capabilities and dependency inspector features plus.

To find out more about our Financial Forecasting solutions, please contact us.