What does “financial forecasting” involve?

Financial forecasting involves predicting a company’s future financial conditions based on historical data. This process is crucial for businesses as it helps them anticipate revenue, expenses, and overall financial performance. By analyzing past financial results, trends, and external factors, companies can make informed decisions regarding budgeting, investment strategies, and resource allocation. This predictive capability allows businesses to prepare for various scenarios, adjusting their strategies to align with projected outcomes.

While the other options touch on important financial analyses, they focus on specific aspects, such as pricing strategies, project evaluations, or competitive analysis, rather than the broad and systematic approach that financial forecasting entails.