The Accounting Review Vol. 33 No. 3 1958
FORECASTING FINANCIAL REQUIREMENTS.
Abstract
Forecasting financial requirements lies at the heart of accounting and financial decisions in the firm. All management decisions deal with the future and forecasting is inevitable. When decisions are made that involve the future, whether recognized or not, an implicit forecast is necessary. In recent years substantial literature on the practices of individual business firms in forecasting their financial requirements has become available primarily from the publications of the American Management Association. There are three main methods for projecting financing requirements. One is based on historical relationships and utilizes statistical methods. The second involves engineering analysis which is a combination of technical know-how and judgment. The third involves an operation analysis, not necessarily technical in nature and relies mainly on judgment and understanding of the kinds of operations the firm engages in. The traditional approach to forecasting financial requirements expresses the firm's needs in terms of the number of days' sales tied up in an individual balance sheet item.
- DOI
- 10.2308/tar-7059532
- Volume
- 33
- Issue
- 3
- Pages
- 427-440
- Language
- en
- Sources
- openalex crossref