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5 Types of
Financial
Projections
oe Asif Masani
@ fpnaprofessionals.com 5 Types of Financial Project
‘1. Budget
Budget creates a baseline to compare actual results
and determine how the results vary from the expected
performance.
Master Budget includes 3 components the Operating
Budget, Cash Budget and the Capital Budget. 2. Annual Operating
Plan (AOP)
Annual operating plan is
broader than the
budget and provides a
practical outline of
company’s targets and
key activities.
While the Budget is a
major part of A.O.P
which ensures that we
have the necessary
resources to carry out
planned activities 5 Types of Financial Projections
"oe
3. Forecast / Business
Outlook
Forecasts are very latest estimates of company’s future
financial outcomes by examining historical data.
It illustrates whether the company is meeting its target
(budget) or not in the near future. 5 Types of Financial Projection
4. Long Range °
Projections
Long-range projections are required to evaluate business
decisions like acquisitions or evaluation of strategic plans
and alternatives. These projections will have a horizon of 2
to 7 or more years. 5 Types of Financial Projectio
-
5. Capital Investment
Decisions (CID’s)
These are evaluations for decisions like investing .
in a new piece of equipment, launching a new
product, decisions such as lease v/s buy, produce
in-house v/s outsource etc ® fpnaprofessionals.com
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