which financial forecast should be realistic course hero

Should you forecast both the best and worst-case scenarios?

2 Introduction A solid financial forecast includes macroeconomic factors and conditions specific to the organization. Long-term and short-term outlooks on revenue and contingencies for expenditures currently viewed as unnecessary are included in a comprehensive forecast. Business leaders use CVP Analysis, also known as break-even analysis, as a financial planning …

What are the different scenarios for the financial forecasting of expenses?

3. Resource feasibility This factor should be able to state the time required for completing the proposed business and the resources needed for such completion. Well-detailed contingency plans must likewise be provided to help the entrepreneur in case of future business dilemmas. 4. Legal feasibility A proposed business must adhere to the laws, rules, and regulations governing …

What are the best scenarios for the future?

Jun 05, 2015 · The most important points to keep in mind when creating financial forecasts is to be realistic and incorporate management’s opinions. Answer : The greatest benefit of the financial forecasting is its use in planning to optimize operations and thereby increase the firm ’s intrinsic value and thus its stock price .

What is the purpose of a financial forecast statement?

THE PURPOSE OF FINANCIAL FORECASTING Purpose: To estimate, evaluate and plan for the firm’s future operational and financing requirements. Financial analysis of past and current financial data provides a basis for financial forecasts. These forecasts of future financial statements can be used as a benchmark to compare against actual operating results.

How often should you revisit your cash flow statement?

Financial forecasting is a dynamic process that you should revisit at least once every quarter, or whenever a major event takes place.

What is the formula for COGS?

As a reminder, the formula for COGS is: Depending on your type of operation and industry, you may need to breakdown cost of sales to keep track of key charges. Just remember: no double-dipping. Once you include certain expenses in your COGS, those costs can’t be listed again under operating expenses.