What does financial forecasting aim to achieve?

Financial forecasting aims to predict future financial outcomes based on historical data, market trends, and various economic indicators. The primary objective is to provide a forward-looking view that helps businesses make informed decisions about budgeting, investing, and strategic planning. This process involves using analytical techniques to estimate future revenues, expenses, and overall financial health, allowing organizations to prepare for different scenarios and set goals accordingly.

While analyzing current financial performance, gathering real-time financial data, and setting historical financial benchmarks can be parts of an organization's financial analysis, they do not directly reflect the core purpose of financial forecasting, which is specifically focused on anticipating what lies ahead in terms of financial performance. Thus, the emphasis is on the ability to project and strategize based on expected future conditions.