s As a division manager at On Your Mark, you are expected to work with the finan
ID: 2663940 • Letter: S
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As a division manager at On Your Mark, you are expected to work with the finance department to develop financial forecasts for your division. Prepare a document that explains why forecasting is important to an organization. In this document, include the following:
plus 2 APA intext citations due friday dec 3 3:30 eastern time
500–750 words Details:As a division manager at On Your Mark, you are expected to work with the finance department to develop financial forecasts for your division. Prepare a document that explains why forecasting is important to an organization. In this document, include the following:
- Explain the forecasting process.
- Compare and contrast the forecasting process to the budgeting process.
- Discuss the role of projected or forecasted (pro forma) financial statements in the budgeting process.
Explanation / Answer
Financial forecasting is the process of estimating future business performance (Sales, Costs and earnings) Corporations use forecasting to do financial planning, which includes the assessment of their future financial needs. Forecasting also is important for production planning, human resource planning etc., Forecasting is also used by outsiders to value companies and their securities. Here we are taking the aggregate perspective of the whole firm rather than looking at indvidual projects. Growth is the key theme behind financial forecasting. Remember that growth should not be the underlying goal of a corporation- Creating shareholder value is the appropriate goal.In many cases, however, shareholder value creation is enabled through corporate growth. Financial forecasting is important for several reasons: First, it enables management to change operations at the right time inorder to reap the greatest benefits. It also helps the company prevent losses by making the proper decisionss based on relevant information. It is also imporatant when it comes to developing new products or new product lines. Financial forecasting considers variables like how your dollar and spending variable will be effected by interest rates, the price of the goods and services etc., in the future. Budgeting is more "real-time" dealing with the practical world - It is an act of planning for income and expenditures for a period of time. Forecasting helps to create a solid budget and is the step prior to budgeting. Forecasting generates an overview of the budget based on current trends, past data, and projected income and expenses. Budget fleshes out the outline set by forth by the forecast. A budget guides the company's finances through the year and helps determine the business plan is effective. Forecasting and Budgeting go hand in hand. Without good forecasting, the budget process can be challenging and produce inaccurate results. Therefore, forecasting followed by Budgeting are two disciplines that every business should use for optimal financial reporting. Forecasting financial statements is a process that involves multiple steps to arrive at forecasted balance sheets, income statements, expense and budget statements used by management and department heads for decision making.
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