FINANCE MANAGEMENT-Being the finace manager of a company how will you make a financial forcasting?

"Finance" is the blood of any organisation (Body). It runs through everypart of the body (organisation). A finance manager is one who has diegested these sentences and plans his work accordingly.

Therefore, an FM Should take up his duties and responsibilities within the current and future needs of the organisation with respect to its Stability, Run, Prospects, Conversions, and future demands. Invariably, the conditionality referred above are goverened by the Policy of the Organisation.

Eg. A company has a policy not to run more than Three Products in the market at any given point of time (Eg.Godrej company and theirs Toilet Soaps). FM has to plan Inflow and Outflow within this principle. His timing of funds (IN / Out) should bear the above policy in mind.

Therefore his duties and responsibilities are regulated within the company's policy. Lest the policy of company will be going on in one direction and FM will be going in another direction. This will create a grate devoid between the policies and actions, giving rise to CONFLICT. Continuing conflict will damage the identity and growth of the organisation. If the organisation is damaged, FM's role will not be present.

Forecasting is the process of estimation in unknown situations. Prediction is a similar, but more general term, and usually refers to estimation of time series, cross-sectional or longitudinal data. In more recent years, Forecasting has evolved into the practice of Demand Planning in every day business forecasting for manufacturing companies. The discipline of demand planning, also sometimes referred to as supply chain forecasting, embraces both statistical forecasting and consensus process.

Forecasting is commonly used in discussion of time-series data.

Categories of forecasting methods

Time series methods
Time series methods use historical data as the basis for estimating future outcomes.

Moving average
Exponential smoothing
Extrapolation
Linear prediction
Trend estimation
Growth curve

Causal / econometric methods
Some forecasting methods use the assumption that it is possible to identify the underlying factors that might influence the variable that is being forecast. For example, sales of umbrellas might be associated with weather conditions. If the causes are understood, projections of the influencing variables can be made and used in the forecast.

Regression analysis using linear regression or non-linear regression
Autoregressive moving average (ARMA)
Autoregressive integrated moving average (ARIMA)
e.g. Box-Jenkins
Econometrics

Judgemental methods
Judgemental forecasting methods incorporate intuitive judgements, opinions and probability estimates.

Composite forecasts
Surveys
Delphi method
Scenario building
Technology forecasting
Forecast by analogy

Other methods
Simulation
Prediction market
Probabilistic forecasting and Ensemble forecasting

Thanks,
Sareesh