Question

Forecasting is an important part of a new business process, especially when discussing obtaining investments from outside entities, as you will need to provide a forecast, and justify how ti was created and generated. 
With this in mind, how would you justify the forecast for your new company?
What information would you use to create and justify the forecast?

Answer 1

Answer;

1) Justification of forecast for a new company:

i)forecasting for acquiring capital assets for company- As for the new company the purchase of assets is very important. the future economic benefits received from that assets should be more the present value of the asset so forecasting in this area is necessary.

ii)schedule of repayments of loans - forecasting regarding the income sources of the new company and the repayment schedule should be done very carefully. as if the income sources are less than the operational and financial charges then that will affect on the profits of the new company negatively and this it will adversaly affect on image of the company.

iii) advance information about production- When you launch new product in market forecast gives you information about potential sales level. Through which we can do optimum production, keep level of stock of raw material. Without forecast it is not possible or the production determination level will be baseless.

iv) Maintaining cashflow- Forecast enables organisation to identify future cash outflows. It gives you tentative list of cash outflows which you spend department wise like for marketing activities, government taxes etc. with the help of the cash flows you can prepare budget and with the hepl of the budget company company can effectively run the business.

2)Information used to create forecast-

i)Environmental changes- for the forecastin the information regarding the environmental changes like change in government policies changes in tax rates change in competitiors strategies etc should be taken into consideration.

ii)Number of competitive products available in market- the information regarding the number of competitive available in market their pricing strategies type of market and other such information must be considered while forcasting.

iii)gather infomation about the cosumers- as more information gather about the consumer it will be benefical for the forcasting. because of this information demand forecasting will be more accurate also the information about the consumer to whome company can reach through the marketing events and strategy is also important.