Financial forecast
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A financial forecast is an estimate of future financial outcomes for a company or country (for futures and currency markets). Using historical internal accounting and sales data, in addition to external market and economic indicators, a financial forecast is an economist's best guess of what will happen to a company in financial terms over a given time period—which is usually one year. See Financial modeling.
Arguably, the most difficult aspect of preparing a financial forecast is predicting revenue. Future costs can be estimated by using historical accounting data; variable costs are also a function of sales. Analysts often use information such as the 52-week high of stock prices to augment their fundamental analysis of stock prices.[1]
Unlike a financial plan or a budget a financial forecast doesn't have to be used as a planning document. Outside analysts can use a financial forecast to estimate a company's success in the coming year.
Tools
Financial tools can be used by entrepreneurs to help them building their company's forecast (Score, Business Model Forecast, ...).
References
- ^ Low, R.K.Y.; Tan, E. (2016). "The Role of Analysts' Forecasts in the Momentum Effect". International Review of Financial Analysis. doi:10.1016/j.irfa.2016.09.007.
A financial forecast is simply a financial plan or budget for your business. It is an estimate of two essential future financial outcomes for a business