FORCAST

Forecasting is the use of historic data to determine the direction of future trends. Businesses utilize forecasting to determine how to allocate their budgets or plan for anticipated expenses for an upcoming period of time. This is typically based on the projected demand for the goods and services they offer.

BREAKING DOWN ‘Forecasting’

Investors utilize forecasting to determine if events affecting a company, such as sales expectations, will increase or decrease the price of shares in that company. Forecasting also provides an important benchmark for firms, which need a long-term perspective of operations. Stock analysts use forecasting to extrapolate how trends, such as GDP or unemployment, will change in the coming quarter or year. The further out the forecast, the higher the chance that the estimate will be inaccurate. Finally, statisticians utilize forecasting in any situation that requires the use of forecasting. For instance, data may be collected regarding the impact of customer satisfaction by changing business hours or the productivity of employees upon changing certain work conditions.

Read more: Forecasting http://www.investopedia.com/terms/f/forecasting.asp#ixzz4eSB7HL1y
Follow us: Investopedia on Facebook