There is a forecasting method called the “Projected Financial Statement Method” method because it starts with today’s financial statements and extends them into the future by predicting how each individual account will change. Another forecasting method used is called the “AFN Formula Method” because it makes some simplifying assumptions that allow whole process to be reduced to a formula.
So what do you think of these forecasting methods? What are their strengths and weaknesses? Do you think they produce accurate results? What refinements would you suggest to make the models better?
I’d be interested to hear your thoughts. Also, if in your line of work some other method of forecasting is used, tell us about it.
Discuss the relationship between budgeting and planning.
