FINANCIAL

FORECASTING
By Group No. 13
Group Members
Arsheen Nakade 46
Abdul Rahman Mulla 43
Anuj 45
Anish 45
 INTRODUCTION
Financial forecasting refers to the process of
estimating future financial outcomes for a business or
organization based on historical data, current market
conditions, and various assumptions. It involves
predicting future revenues, expenses, profits, cash
flows, and other financial metrics to help
management make informed decisions and plan for
the future.
TYPES OF FINANCIAL FORECASTING

Short-Term Forecasting

Short-term forecasting predicts financial performance over

the next few months to a year.
It focuses on immediate operational needs and helps
businesses manage day-to-day finances effectively.
Short-term forecasts often include cash flow projections,
sales forecasts, and expense predictions.
TYPES OF FINANCIAL FORECASTING

Medium-Term Forecasting

Medium-term forecasting forecasts financial performance

over one to three years.
It helps businesses plan for medium-range goals and
initiatives, such as expansion projects, product launches, or
technology upgrades.
Medium-term forecasts typically involve revenue growth
projections, cost estimates, and investment planning.
TYPES OF FINANCIAL FORECASTING

Long-Term Forecasting

Long-term forecasting projects financial outcomes over three

years or more.
It is used for long-range strategic planning, capital budgeting
decisions, and investment analysis.
Long-term forecasts consider broader economic trends,
market shifts, and industry dynamics that may impact the
organization's future financial health.
 Economic Conditions: The overall state of the
economy, including factors like GDP growth,
inflation rates, interest rates, and employment
01 levels, can significantly impact financial
Factors forecasts.

Influencing Industry Trends: The specific trends and

conditions within the industry in which a

on Financial 02 company operates can affect its financial

performance

Forecasting
Industry dynamics: Competitive landscape,
03 technological advancements, and regulatory
changes can affect financial forecasts
 Company-specific factors: Internal factors
such as production capacity, pricing strategies,
and operational efficiency also influence
04 financial projections.
Factors
Historical Performance: Analyzing past financial
Influencing performance provides valuable insights into
trends, patterns, and seasonality that can inform
on Financial 05 future forecasts

Forecasting Financial Policies and Strategies: Financial

forecasting is influenced by the company's
06 financial policies and strategies, including
investment decisions, financing choices, dividend
policies, and capital structure.
Components of Financial forecasting
Sales forecast Expense forecast
Sales Projections Operating Expenses
Customer Segmentation Variable costs
Product Mix Capital Expenditures

Cash flow forecast Balance sheet forecast

Revenue Projections Assets
Expense Forecasts Liabilities
Working Capital Analysis Equity
 Key Metrics - Ratios
In financial forecasting, ratios play a crucial role in evaluating the overall
financial health and performance of a company. There are different types of
ratios Profitability ratios, Liquidity ratios, Leverage ratios, Efficiency ratios
which are used for forecasting.

Ratios :
Gross Progit Margin = Gross profit / Total revenue

Operating Progit Margin = Operating profit(EBIT) / Total revenue

Return on Assets = Net income / Total assets

Debt to equity ratio = Total debt / Total equity

Example: Financial
Forecasting of
Tega industry