Originally published: 3/23/2020
Why are financial projections important and how can they inform a company’s financial analysis to increase confidence in the numbers?
To answer that question, we need to take a step back. Preparing financial statements is an important first step in the business planning process because these financials form the basis for predicting business outcomes for future reporting periods.
Using that foundation financial revenue and expense projections are generated from compiling the internal and external accounting data you already use in the day-to-day management of your business. These projections allow you to get a more accurate view of how successful your business can be so you can determine what to keep and what to cut when planning.