Forecasting in SimVenture presentation

1. Financial forecasting and how it
works in SimVenture

2.  Definition: Forecast is a « prediction of a future state
of the environment. » (Laney & Latrill, 2014) .
 Financial Forecasting is about financial item: prediction of sales
incomes, expenses, cost of goods and cash flow
What is Financial Forecastings ?

3.  Sales Forecast
Used to predict income from sales
 Profit and Loss forecast
Used to predict how profitable you will be
 Cash-flow forecast
To predict when cash will flow into and out of your
business
Key Financial forecasts

4.  “Leading organisations widely acknowledge that forecasting is at the heart
of the performance management process, and is potentially a significant
driver of business value and investor confidence.”
 “CFOs of leading organisations use the forecasting process to identify
opportunities to drive business improvement, to determine growth
strategies, and reinforce external stakeholders' confidence in the business
with the transparency, visibility and integrity of their financial projections.”
Scott Parker
Head of Financial Management
KPMG International
Why do we use financial forecasts?

5. • No business can be run successfully without a firm grasp of how the business is doing
financially.
• Forecasting can help companies plan ahead and remain healthy in all conditions.
• Financial forecasts assist in managing your finances. They are a future prediction of
your business finances.
• Predicting the financial future of your business is not easy, especially, if you are
starting a business and do not have a trading history. However, forecasting and
making adjustments frequently will enable you to become more accurate.
• Regular forecasts allow you to closely monitor your finances and develop strategies to
fix problems before they become major issues.
Why do we use financial forecasts?

6.  Marketing people need forecasts to estimate the expected
demand that will be generated from the activities.
 Sales people use forecasts to understand what volumes
are expected in each period and to evaluate the sales
pipeline activity to make sure it supports those
expectations.
 Managers in the supply chain use forecasts to make timely
purchasing requests, develop production plans, evaluate
capacity needs, and develop logistical plans.
 Finance professionals use forecast to prepare and
understand financial plans.
Who uses financial forecasts?

7. How forecasting works in Sim
Venture
Accessed from the
forecasting section of
the menu page Simple Report
Detailed Report

8. Other financial reporting tools
• Clicking on Overview will give
you access to financial
reporting charts
• SimVenture also
allows printing of
financial forecasts

9.  How do you access the financial charts in SimVenture?
 A) Under the forecasting heading of the menu
section.
 B) In the history section.
 C) In the overview section.
 D) There are no charts in SimVenture.
MCQ`s

10.  Which one of the anwers below is not a financial
forecasts ?
 A) Sales
 B) Budget
 C) Profit and Loss
 D) Cash Flow
MCQ’s

11.  What is a forecast?
 A) a plan used to decide the amount of money that
can be spent and how it will be spent.
 B) reporting on previous income and expenditure.
 C) A prediction of the weather.
 D) A prediction of a future state of the environment.
MCQ`s

12. References
 Laney, E. M. & Latrill, P., 2014. Accounting and Finance An introduction.
7th éd. Harlow: Pearson.
 Small Business Development Corporation, 2015. Financial forecasts. [En
ligne]
Available at: https://www.smallbusiness.wa.gov.au/business-
topics/money-tax-and-legal/money-matters/financial-forecasts-2/
[Accès le 26 January 2016].
 UK government, 2014. Forecast your business finances. [En ligne]
Available at: https://www.gov.uk/forecast-business-finances
[Accès le 26 January 2016].

13.  What is the difference between a budget and a forecast? - questions &
answers (2013) Available at: http://www.accountingtools.com/questions-
and-answers/what-is-the-difference-between-a-budget-and-a-
forecast.html (Accessed: 3 February 2016).
 Player, S. (2010) Why forecasting?. Available at:
http://businessfinancemag.com/blog/why-forecasting (Accessed: 3
February 2016).
 Epstein, Lita. Business Owner's Guide to Reading and Understanding
Financial Statements : How to Budget, Forecast, and Monitor Cash Flow
for Better Decision Making. Hoboken, NJ, USA: John Wiley & Sons, 2011.
ProQuest ebrary. Web. 3 February 2016. Copyright © 2011. John Wiley &
Sons.
Referencing

14.  Parker, S. (2007) Forecasting with confidence insights from
leading finance functions ADVISORY. Available at:
http://www.kpmg.com/dutchcaribbean/en/services/advisor
y/documents/forecasting-with-confidence.pdf (Accessed: 8
February 2016).
 Beattie, A. (2011) ‘The basics of business forecasting’, in
Available at:
http://www.investopedia.com/articles/financial-
theory/11/basics-business-forcasting.asp (Accessed: 8
February 2016).
References