TABLE OF CONTENTS I never think of the future; it comes soon enough.
Boyadjian and Warren, RISKS, Reading Corporate Signals, 1987.
The objective of a business forecast is to predict or estimate a future activity level such as demand, sales volume, asset requirements, inventory turnover, etc. A forecast is dependent on the analysis of historic and/or current data to produce these estimates. Having accurate forecasts can play an important role in helping an organisation to operate in an efficient and effective manner.
However, before being in a position to create a forecast it is necessary to look carefully at what has happened in the past. As well as examining historic data it is also important to be aware of the organisation's position in its industry and the industry's position in the global marketplace. This is equally true for not-for-profit organisations, which are likely to be more interested in budgeting costs as opposed to profit.
The process of forecasting can be broadly categorised into two approaches: objective or quantitative forecasts and subjective or qualitative forecasts.
Subjective or qualitative forecasts rely to a large extent on an in-depth knowledge of the activity being forecast by those responsible for producing the forecast. The forecast might be created by reading reports and by consulting experts for...
