Financial Statement Forecasting Essay Example | Topics and Well Written Essays - 750 words

pecuniary Statement Forecasting - turn out ExampleThere is no denying the fact that investors and share holders around the world base their decisions on pecuniary and economic forecasts (Olley, 2006, 1). Thus a professional, pragmatic and propitious financial statement forecast will gird its plans of rapid future growth by exploiting novel business opportunities, undergoing product diversification and resorting to aggressive acquisition.The triumph of a company depends to a great extent on the reliability of its financial statement forecasting. To date this, it is a must that, the assumptions made in the previous Corporation Budgeting cycle, but not limited to, estimated gross sales volume, capital requirements, staffing resource requirements, customer demands and vendor contracts are exclusively meticulously verified and updated to reveal all the possible changes and the most recent information available (Harvard, 2008). All the possible changes projected or constrain shou ld be balanced by an appropriate action by the management. Microsoft Excel is the most common shit used during forecasting. Financial forecast has to be customized to suit the external and internal realities of a business and has to be flexible to accommodate future changes. The most common methodologies used for forecasting are Current twelvemonth Budget, Straight Line, Year to Date Actual plus Estimated Future Spending and Prior Year Data.Though the data required to achieve a financial forecast is basically the same as what is required to acquire the budgeting process, forecasting differs from the budgeting process in the sense that a budget is a statement prepared a year in advance that gives guidelines for spending and acts as a yardstick for analyzing the business performance of a company, forecasting involves extrapolating the current performance of a company to estimate the future income, expenditure and growth prospects..ReferencesFinancial Forecasting (2008). Harvard. Ret rieved August 24, 2008, fromhttp//www.vis.harvard.edu/staff/policies/financial_forecasting.phpFunky Finance (2008). CIMA. Retrieved August