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Forecasting is one of the most important aspects of financial planning. Discuss what variables do you...

Forecasting is one of the most important aspects of financial planning. Discuss what variables do you think make this exercise most challenging.

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Answer #1

Strategic planning requires forecasting to define strategies and make decisions based on the formulated strategies and given resources are allocated efficiently. The future outcomes of a company are estimated through financial planning using historical data and market conditions also external factors help determine the financial status of a company over a given period. A financial forecast uses financial modeling to execute its activities; it is a model which anticipates the performance of a financial asset, portfolio or a project usually relates to accounting or asset pricing etc. The most difficult task in the financial forecast is to predict revenue for a company using historical data, analysis of trends and variable costs are also associated with sales.

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