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The Role Of Financial Forecasting

2011/1/6 11:19:00 39

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Financial forecast plays a very important role in improving the management level and economic efficiency of the company.

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performance

In the following aspects:

1. financial forecasts make important decisions for business decisions.

The key to management is decision making.

Policy decision

The key is to make predictions.

It provides basis for decision making by forecasting, so that decision-makers can weigh the pros and cons and make the right choice.

For example, when a company makes a business decision, it must involve cost, income and capital requirements. Most of these problems need to be estimated through financial projections.

All things stand before they are expected.

Therefore, financial forecasts directly affect the quality of business decisions.

2. the financial forecast is that the company arranges the revenue and expenditure rationally and improves the efficiency of fund utilization.

company

To do well in raising and using funds, we need not only be familiar with the past financial revenue and expenditure rules of the company, but also be good at the future capital flow of Forecast Ltd, that is, what capital inflows and outflows the company has in the planning period, whether the balance of payments is balanced or not.

3. financial forecasting is an important means to improve the management level of the company.

Financial forecasting not only provides support for scientific financial decisions and financial plans, but also helps to cultivate financial managers' foresight and foresight, so that they can prepare for danger and prepare for rainy days.

At the same time, the financial forecast involves a lot of scientific methods and modern management methods, which is undoubtedly of great help to improve the quality of financial management personnel.

It should be pointed out that the size of the financial forecast is affected by its accuracy.

The higher the accuracy, the greater the effect; vice versa.

The factors that affect the accuracy of financial forecasts can be divided into subjective and objective factors.

The subjective factor mainly refers to the quality of the forecaster, such as mathematical statistical analysis ability and prediction experience.

Objective factors mainly refer to the dramatic changes in the internal and external environment of enterprises, such as SARS (atypical pneumonia) and other emergencies.

Therefore, financial forecasting workers should constantly improve their forecasting ability, accumulate experience in practice, and improve the accuracy of prediction.