FINANCIAL PLANNING&

FORECASTING
•Planning process start with determine various goals or objective of
firm
•To achieve the goal ,various strategy are formed &for

implementation of strategies various policies & plan are formulated

•Financial planning is one of it

•Financial planning indicate growth of firms

performance,investment,during a period of time usually 3 to 5 year

•It involve projected profit & loss account, balance sheet; fund flow

& cash flow statement

 Financial planning involve answer of
following questions-
1. How much would be requirement of funds?

2. From which source funds to be raised?

3. What will the profit ,loss position in future?

4. How much will be growth in sale in future?

Financial plan cover following aspect

 Economic environment
 Sale forecasting
 Projected statement
 Projection of assets
 Pattern of financing
 Cash budget
 Elements of financial planning
 Sale forecast-
1. Analysis of past sale
2. Dependant factor method
3. Market research method
4. Estimates given by sales force
5. Test market method
6. Experts opinion method
7. Projection method
8. Quantitative method
 Projected profit & loss account-
1. % Of sale method
2. Budgeted expense
3. Combination method
 Projected balance sheet
 Cash budget-
 Financial forecasting
 Financial forecasting is integral part of financial
planning
 It is one of imp function of f.m

 It is easy to analyze past but real skill required to

forecast future.
 Forecasting base on past trends