What are the types of financial forecasts?

Financial forecasts can be categorized into two main types: short-term forecasts and long-term forecasts. Short-term forecasts typically cover a period of one year or less and are used for immediate planning and decision-making. These forecasts help businesses project revenues, expenses, and cash flow to ensure they have enough liquidity to meet operational needs and make informed tactical decisions.

On the other hand, long-term forecasts extend beyond one year and are essential for strategic planning and investment decisions. They incorporate broader economic trends, industry developments, and the company's growth strategy, providing insights into potential performance over a longer horizon.

This dual approach allows organizations to balance immediate operational requirements with long-term growth objectives, making informed and strategic financial decisions.