Financial forecast
In one sentenceAn estimate of what sales, expenses or cash are expected to be in the future, based on past data and current conditions.
Simply put
A forecast asks: where are we heading if things continue as they are? You take the trend of past figures and adjust it with what you know about the market and the seasons.
It is updated whenever new information appears, and it helps you revise the budget if its targets turn out to be far from reality.
Worked example
A clothing store's average monthly sales are 100,000 SAR. Assuming 5% growth for illustration, it wants to forecast next month's sales.
Current average monthly sales100,000 SAR
Assumed growth5%
Forecast for next month = 100,000 × 1.05105,000 SAR
Don't confuse it with
BudgetA budget is a target management approves and commits to, while a forecast is a neutral expectation that changes with every new piece of information.