Financial forecasting is a tool for economic planning

Financial forecasting is a mechanism for using specific methods for calculating the main financial indicators. The main methods include econometric forecasting, mathematical modeling, building trends and expert assessments.

When using mathematical modeling, the linear programming model is used as the basis for calculations for the optimal solution . Transport and network models are also used.

Financial forecasting involves the use of economic forecasting, based on the basic principles of statistics and economic theory. In other words, the calculation of the forecast indicators is carried out on the basis of statistical coefficients using one or more economic variables that are taken into account as factors affecting the forecasting results. The dynamics of the analyzed indicators is considered taking into account the factors that have a significant impact on financial processes.

For the construction of econometric models, regression analysis is used, which makes it possible to give a quantitative estimate of the averaged indices that formed in the economy in the base period. To improve accuracy in the results obtained, methods of forecasting the main financial indicators should be supplemented with expert estimates.

The method of expert assessments serves to generalize and mathematical processing of expert evaluations of experts on a specific issue. The effectiveness of this method directly depends on the competence and professionalism of specialists. The forecast can have a fairly high accuracy. The only drawback with this method is subjectivism, i.e. Dependence on the "sensations and intuition" of the expert, which sometimes can not be rationally explained. In practice, methods of collective and individual expert assessments are known.

Financial forecasting would not be considered in full, unless we describe the trend method, which assumes the dependence of both incomes and expenditures on such a factor as time. There are two types of trends known - a trend of constant growth rates, which follows from constant changes, or a time linear trend that involves the analysis of permanent changes in absolute terms. The main drawback of this method is the complete ignoring of demographic, economic and other factors.

Financial forecasting can be carried out with the help of statistical observations, which are conducted with a certain regularity. The tool of statistical forecasting is regression trend models. The parameters of these are first evaluated on the basis of the available statistical base, and then the trends are extrapolated to a specific time interval.

Forecasts allow you to consider all possible options for improving the financial system under various scenarios of economic development, the business entity and market conditions. Financial forecasting can be short-term, i.e. All mathematical calculations consider a period of up to one year, medium-term (3-5 years), long-term (more than 5 years). This type of forecasting is carried out at three economic levels (national, territorial and simple economic entity).

The national level provides for calculations that form the financial resources of the state, determines the directions for their development. The result of this prediction is the compilation of the state budget.

Financial forecasting of the territorial level is carried out in a manner similar to the national-level forecast. At the level of economic entities, forecasting is a financial management, consisting in the development of the directions of the enterprise development and the formation of financial resources for the future. Also at this stage, a strategy is being determined that would ensure the financial stability of the enterprise, as well as creditworthiness and solvency.