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Revision as of 10:50, 18 January 2013
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A financial forecast is an estimate of future financial outcomes for a company or country (for futures and currency markets). Using historical internal accounting and sales data, in addition to external market and economic indicators, a financial forecast is an economist's best guess of what will happen to a company in financial terms over a given time period—which is usually one year. See Financial modeling.
Arguably, the most difficult aspect of preparing a financial forecast is predicting revenue. Future costs can be estimated by using historical accounting data; variable costs are also a function of sales.
Unlike a financial plan or a budget a financial forecast doesn't have to be used as a planning document. Outside analysts can use a financial forecast to estimate a company's success in the coming year.
Reference class forecasting was developed to reduce error and increase accuracy in financial forecasts.
References
1. Financial Forecast Models - This page throws light on the fundamentals for financial forecasting.
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