Competitive Exams Accountancy Finaancial forecasting

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Financial Forecasting

Technique adopted while doing financial forecasting

which all technique are adopted while doing financial forecasting, also explain problems in financial forecasting. Answer: Financial forecasting aims ate predetermining the demand for funds and the avenues where the funds are to be utilized. Thus a systematic projection of the financial data is made in the form of financial statement fund flow analysis, financial ratio ext. Financial forecasting generates information whish is utilized by the management of an enterprise for taking decision s particularly for judging the financial efficiency of the funds and projecting a scale of standards to be followed in the future course. Another important basic objective of financial forecasting is its use as control device. Optimum utilization of funds, by a company can be planned through financial forecasting. Financial forecasting is done by using the following technique

1 Fund flow analysis

2 Pro forma financial statements

3 Cash budget