A financial projection is a future forecast for the country, organization or business’s revenue and expenses. In addition to the projection of entire financial condition of the organization and its future, it accounts for the information for the organization financial performance, historical income and data cost, and further estimates the organization’s external market development. However, there are always some uncertainties when projecting the company’s financial conditions.
The financial projection is often hit by uncertainties which arise from different conditions or circumstances. For this reason, it is very important for an individual to understand that though the uncertainties in financial projections can be minimized, entirely avoiding these issues is out of the questions. To avoid scaring the audience when explaining the financial projections uncertainties, one ought to have a well laid down plan on how to overcome the variations to enhance their trust (Zhang, 2011).
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Firstly, they should explain to the audience the uncertainties regarding the financial projections by frankly telling them the methods they use to arrive at the result of the financial projection and the likely variable outcomes it has. Secondly, they should explain to the audience the most important course of actions or parameters which are underway towards finding the solutions to the deviations that occur (Doran et al., 2011). This is very important in restoring the confidence of the audience and giving them some hope of the future of the organization.
Also, there should be well-explained notes on the financial projections numbers’ permissible variations. In this case, the note should be inclusive of the explanations of the parameter or the corrective measures which are underway toward correcting the variations or mitigate it. Also within the information should be how the mitigations strategies have less impact on the audience financial situations. With this kind of explanations, the audience gains confidence, and they may not be scared upon receiving this information.
References
Doran, T., Kontopantelis, E., Valderas, J. M., Campbell, S., Roland, M., Salisbury, C., & Reeves, D. (2011). Effect of financial incentives on incentivised and non-incentivised clinical activities: longitudinal analysis of data from the UK Quality and Outcomes Framework. Bmj , 342 , d3590.
Zhang, Y. J. (2011). The impact of financial development on carbon emissions: An empirical analysis in China. Energy Policy , 39 (4), 2197-2203.
