Focusing on Forecasting
Companies all around the world are focused on quarterly as well as annual results. As soon as these results are announced, the financial markets give some sort of reaction. If the results are good, the stock prices rise. If not, stock prices tend to fall. However, in either case, the stock price is linked to the latest earnings numbers which are released by any company. This is the reason why companies spend many hours collating these results and trying to project them as positive news to the investors.
This is understandable to some extent. Investors are right when it comes to obsessing about past information. However, the extreme focus which company executives lay on these results is not really understandable. Instead of focusing on the past, company executives would be better off if they focused on the future, i.e. the forecasts. These executives should know that the valuation of any company is actually driven by the discounted value of cash flows. They should also be aware that forecast statements are the roadmap to making projected cash-flows a reality.

Some companies do give out revenue guidance for the forthcoming year along with their annual reports. However, the focus on the future is much less as compared to the focus on the past.
In this article, we will explore how the forecast statement can be strengthened so that it provides more details and better insights to prospective investors.
Characteristics of a Good Forecast Report
The bottom line is that forecasting is as important (if not more important) as the quarterly/annual results. However, since they are not a mandatory financial statement, considerably less time is devoted to their preparation. This needs to change since forecasts can also be used strategically.
Related Articles

Authorship/Referencing - About the Author(s)
The article is Written By Prachi Juneja and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.