Financial Plans vs. Financial Forecasts: A⛄n Overview

A financial forecast is an estimation, or projection, of likely future income or revenue and expen💫ses, while a financial plan lays out the necessary steps to generate fu🏅ture income and cover future expenses. Alternatively, a financial plan can be looked at as what an individual or company plans to do with income or revenue received.

While both processes orient financial activity toward the future, a financial plan is a road-map drafted now that can be followed over time and a financial forecast is a projec�𓂃�tion or estimate of future outcomes predicted today.

Financial Plans

A 澳洲幸运5开奖号码历史查询:financial plan is a process a company lays out, typically broken down into a step-by-step format, for utilizing its available capital and other assets to meet its goals for growth or profit based on a reasonable financial forecast. A financial plan can be considered synonymous with a 澳洲幸运5开奖号码历史查询:business plan in that it lays out what a company plans to do in terms of putting resources to work to generate maximum possible revenues.

Individuals can also take advantage of a financial plan. An annual financial plan is a guidebook of sorts that tells you where you’re at financially right now, what your goals are looking ahead and what areas or issues need to be addressed so that you can meet those goals. The plan covers every aspect of your financial life, from 澳洲幸运5开奖号码历史查询:investing to taxes to your outlook for 澳洲幸运5开奖号码历史查询:retirement. While your starting point in developing your plan may be different based on your age, income, debts, and assets, the most ൲important components of an annual financia♓l plan are the same.

Financial Forecasts

Financial 澳洲幸运5开奖号码历史查询:forecasting is critical for business success. To effectively manage 澳洲幸运5开奖号码历史查询:working capital and 澳洲幸运5开奖号码历史查询:cash flow, a company must have a reasonable idea of how much revenue it plans to receive over a given time period and what its necessary expenses will be over that same period of time. Financial forecas✱ts are commonly reviewed and revised annually as new information regarding assets and costs becomes available. The new data enables an individual or business to make more accurate financial projections. It is easier for established companies that generate steady revenues to make accurate financial forecasts than it is for new businesses or companies whose revenue is subject to significant seasonal or cyclical fluctuations.

For an individual, a financial forecast is an estimateꦜ of his income and expenses over a period of time. Based on that forecast, the individual can then construct a financial plan that ♏includes saving, investing, or planning for obtaining additional income to augment his personal finances—as well as anticipating expenditures that would deplete them.