What is the difference between financial forecasting and financial modeling?

Answer:

The difference between financial forecasting and financial modelling in that the first process in which a company thinks and prepares for the future, while the latter is an act of calculation, prediction and assessment of financial performance of the company.

Financial Forecasting

When a company maintains its financial forecasts, it seeks to provide the means to Express their goals and priorities to ensure their internal consistency. It can also help the company identify an asset or debt, necessary to achieve its goals and priorities.

A good example of the financial forecast is the prediction of sales. Since most financial status report accounts belong to or are associated with sales forecasting sales can help the company to make other financial decisions that support the achievement of their goals.

Financial Modeling

Financial modeling, on the other hand, is the process by which the company builds its financial representation. The model created in the financial modeling used to make business decisions. Financial models are mathematical models made by the company in which the variables are related to each other; the company may change these variables to see how changes can affect your business.

Financial models are used to analyze historical information, the company projects a full presentation about the company, the shares or investment research or project Financial analysis. They are used to create Pro forma financial statements.

Financial modeling financial projections created during the financial forecasting and building predictive models that help the company make informed business decisions based on their forecasts and assumptions.

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