Financial Forecasting Checkpoint

Financial Forecasting CheckPoint FIN/200 Axia College of University of Phoenix Write a 200- to 300-word explanation of the reasons the following types of companies would need a financial forecast: brand new company, family-owned company, and a long-standing corporation. The reason type of companies such as brand new companies, family-owned companies, and long-standing companies would need a financial forecast is to develop projected financial statements; a series of pro forma.The information developed by a series of pro forma provide a sort of estimate on inventory, payables, receivables as well as what would be required for profit and borrowing. A projected financial statement provides a kind of advantage in any of the companies listed above as it gives the firm an insight on operations. A pro forma would help guide companies in deciding how to best operate and succeed.When starting a brand new company a financial forecast is essential. A financial forecast would help a brand new co mpany decide on how much inventory would be needed, cost of start up and production, and how much capital is needed. Obtaining a financial forecast would also help guide a brand new company on how much profit the company can make, whether a bank loan would be needed to start up and how many individuals can be hired.Family-owned companies need financial forecast just as much as a brand new company. A family-owned company would need a financial forecast for obtaining information from the simplest of things like how much inventory is in stock, profit sharing, expected expenses and profit for the future. A family-owned company would need a financial forecast to also make good decisions on continuing a successful business, which department needs revamped or tweaked.It is essential for a family-owned company to obtain a financial forecast to also estimate whether sales income would be enough to cover expenses and whether cutbacks need to be made. A long-standing company, even though it ha s been in business for a long time (hence the phrase â€Å"long-standing†) needs a financial forecast for the same reasons a brand new company and a family-owned company needs it. A pro forma (financial forecast) would provide a long-standing company with estimated future profit, expenses, cash budgets, and sales income. A inancial forecast can also help guide a long-standing company in making decisions on things like increasing sales, whether advertising is needed and whether certain investments prove to be worth it. Although, a financial forecast is just basic estimation of what is to be expected in the future it provides essential information that could help guide any type of company in the right direction. Starting a brand new company, a family-owned company, and a long-standing company all have something in common: producing a successful company in all aspects.