FINANCIAL FORECASTING

FOR STRATEGIC GROWTH

STRATEGIC GROWTH
One under which management plans to
advance further and achieve growth of
the enterprise in fields of manufacturing,
marketing and financial resources.
LONG RANGE PLANNING

Is a means of systematically thinking

about the the future and anticipating
possible problems before they occur.
FINANCIAL PLANNING

Statement of what is to be done in the

future
Way in which financial goals are to be
achieved
GROWTH AS FINANCIAL
MANAGEMENT GOAL

GOAL
INCREASE IN MARKET VALUE OF OWNER’S EQUITY

GROWTH
 PERSPECTIVE OF FINANCIAL PLANNING

1ST DIMENSION - PLANNING HORIZON

2ND DIMENSION – LEVEL OF

AGGREGATION
What are the
benefits can be
derived from
financial
planning?
Provides a rational way of planning options or
alternatives
Interactions or linkages between investment
proposals are carefully examined
Possible problems related to the proposal projects
are identified actions to address them are studied.
Feasibility and internal consistency are ensured.
Managers are forced to think about goals and
establish priorities
Financial
Planning Models
Elements:

 Economic Environment Assumption

 Sales forecast
 Pro forma statements - Financial Position, Income Statement,
Statement of Cash Flows and Stockholders’ Equity
 Asset Requirement
 Financial Requirements
 Additional Funds Needed (AFN)
THE PROJECTED FINANCIAL METHOD

 Determining how much money the firm will need during a

given period
 Determining how much money the firm will generate
internally during the same period
 Subtracting the funds generated from the funds required
to determine the external financial requirements
Steps in the procedures:

Forecast the income statement

Forecast the Statement of financial position
Raising the additional funds needed
Consider financing feedbacks