Financial Forcasting of Company

Financial Forcasting:Meaning 

It is a estimate of  future financial outcomesfor a company or a country.Financial forcast identifies trends in internal and external historical data and analyse those trend and provide informations to the financial analyst what the company is to be at some point of time in future.

Types of Forcasts in Company:

1.Profit/Loss Forcasts:It means forcasting future profiltability of the company by analysing historical Profit/Loss accounts.Profit/Loss forcasting helps financial managers to predict future scope of the businesses and makes financial policies accordingly.

2.Sales Forcasts:It means predicting future sales figures by analysing historical sales data.It is a key financials drivers for most of the business.

3.Cash Flow Forcasts:It means to estimate company's future cash situation based upon the anticipated result from all operating activities.

4.Projected Balance Sheet:It is a estimation of company's assets,debts and owner's equity position based upon the anticipated result from all operating activities.

5.Others:

    5.1 Breakeven:Company has to forcast the breakeven period to analyse the time required by the company to recover its investments of the business.

    5.2 ROI:Company also forcast the Return on Investment(ROI) to judge the profitability of the business.

 

QUARTERLY PROJECTION OF COMPANY FINANCIAL ANALYSIS:
1.Sourcing Data & Information:
   1.1 Sourcing Company Quarterly Data:
     a) Analyst has to capture the Performance data for last 12 quarters of the company by keeping the industry characteristics in mind.
       b) Analyst of the Company also arrange the important notes in the disclosure which should indicate any change in the past.
        c) Company has to segmented the different information arranged into segmented revenue,results,Capital employed ect.
   1.2 Sourcing Other Information of Company:
       a) Analyst has to arranged the recent annual report of the comapny for financial analysis. 
      b) Financial analyst also arrange the press release and media coverage of the company to get various valuable information ablout company and its sectors.
        c) Company arange the analysis coverage report on the company.
   1.3 Capturing Industry Trends:
    a) Company arranged the scanned news on industry value chain for 3 month,which indicate raw materials,intermideate product and supplies,Human resources,Regulations,Competition & comsumer trends.
     b) Analyst has to research companies monthly publications like Newspapers,Magazines and Industry association websites.
      c) Financial analyst has to arrange the free and sucsccribed sources of industries ,also has to arranged the publication of brokerage houses.
      
2.Business Analysis:
    2.1 Product & Services:Business analyst has to analyse the product and services of the company which shows the quality of product and services.
    2.2 Business model & Stratergies:Analyst had to identify the Business model and key stratergies of the company,which helps to rectify any error in the Business model.
    2.3 Key Business Drivers:Business analyst has to identify the key business drivers of the company.
    2.4 Segment Analysis: Analyst also has to do the segment analysis to identify the profitability of different segment.
3.Financial Aanalysis & Projections:
    3.1 Use Quarterly Data:Financial analyst has to use the quarterly data of Balancesheet,Profit and Loss a/c,Cash flow statements ect. for projection of future financial performance of the company.
    3.2 Anchors of Revenue Projections:Analyst has to use the past revenue for analysing the future revenue of the company.
    3.3 Expenditure Projections:Also,analyst has to predict the future expenditure by using historic data of the company's expenditure.
    3.4 Projections of Other income & Expenditure:If the is any other expenditure and income which are also predicted by the analyst.

4.Industry Numbers & Validation: 
   4.1 Analyst of the company has to use the past trends of the Industry and use it's historic numbersfor the forcasting the future policies of the company.
   4.2 Company has to look the industry average to compare it's current result in oreder to take correct decision for the future growth.
  4.3 Company has to see the key risk while using the  industry numbers for forcasting it's future results.Company hs to verify whether the industry numbers are accurate or not.
  4.4 Analyst has to compare the whole data of the industry with the small data of the companies like compare industry annual average balancesheet numbers  with companies quarterly balance sheet numbers.
  4.5 Company has to analyse the industry seasonal factor's with company's factors.