This article needs additional citations for verification. (May 2009) (Learn how and when to remove this template message)
A financial forecast is an estimate of future financial outcomes for a company or project, usually in the context of budgeting, capital budgeting and / or valuation; see Financial modeling #Accounting. (For a country or economy, see Economic forecast.)
Typically, using historical internal accounting and sales data, in addition to external industry data and economic indicators, a financial forecast will be the analyst's modeled prediction of company outcomes in financial terms over a given time period — which is usually one year. (For fundamental analysis, analysts often also use stock market information, such as the 52-week high of stock prices to augment their analysis of stock prices.)
Arguably, the key aspect of preparing a financial forecast is predicting revenue; future costs, fixed and variable, as well as capital, can then be estimated as a function of sales via "common-sized analysis" - where relationships are derived from historical financial ratios and other accounting relationships. For the components / steps of business modeling here, see the list for "Equity valuation" under Outline of finance #Discounted cash flow valuation.
- Low, R.K.Y.; Tan, E. (2016). "The Role of Analysts' Forecasts in the Momentum Effect". International Review of Financial Analysis. 48: 67–84. doi:10.1016/j.irfa.2016.09.007.
|This finance-related article is a stub. You can help Wikipedia by expanding it.|
|This accounting-related article is a stub. You can help Wikipedia by expanding it.|