An important element of budgeting and planning is financial forecasting. Determining the finances of a business requires certain understanding of financial assumptions. The necessary steps for financial forecasting are important elements of projecting future growth, types, and methods of financing capital requirements, the impact of changes in interest rates and dividend payouts as well as alternatives to capital financing and its impact on debt ratio and equity. Financial planning is a method that will overall affect the financial investment decisions in Executive fruit’s financial planning. By using pro-formas, it is safe to say that a growth rate assumption for future years can be determined much easier. Many of the financial ratios indicate whether the company will be financially fit and healthy at the end of the planning period. A pro forma income statement and balance sheet is effective especially when determining the necessary amount and timing of a company’s future cash requirements.
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