Why construct financial forecasts?
In simple words, finance can be regarded as a process of managing capital or money. This can include a sequence of activities where the capital is either invested, budgeted, or borrowed.
Answer and Explanation:
The construction of financial forecasts is vital due to the following reasons:
- To provide a perspective regarding the growth of a company.
- They can be considered as a point of reference for analyzing the performance of the company with respect to itself and in comparison to its competitors.
- Are useful in determining future investment amounts required for business endeavors as well as about the viability of those endeavors.
- For a company to recognize deficits in manufacturing and accordingly take the appropriate corrective measures.
- These predictions help organizations set targets of manufacturing for potential consumers so that there are minimal losses.
Become a member and unlock all Study Answers
Try it risk-free for 30 daysTry it risk-free
Ask a question
Our experts can answer your tough homework and study questions.Ask a question Ask a question
Learn more about this topic:
from Corporate Finance: Help & ReviewChapter 8 / Lesson 7