How do we differentiate between Financial Projections & Financial Forecast?

How do we differentiate between Financial Projections and Financial Forecast?

A structured financial discipline starts with Financial Projections and/or Financial Forecast.

Financial Forecast refers to the estimations for the future based on available historical data. Contrary to this, the Financial Projections are estimates for the future based on particular assumptions made.

Both the Forecast and Projections can vary even for the same period in future. Continuing with the progress the business is making, the future forecast may show a specific picture. Where assumptions are made to construct the future estimates, even for a similar period as that of the forecast, the results may come out to be divergently different.

We at baap Advisory can construct Financial Forecasts to show that if similar circumstances exist in which the business is currently operating, the future would turn out to be as shown by the forecast.

As against this, we may also build Financial Projections under different scenarios to present how the business may perform under the assumed scenarios.

Both the Forecast and Projections, nevertheless, act as an ardent financial tool of management to set the planning and strategies right for the business growth and expansion.

Contact baap Advisory for further assistance.