Cumulative forecast
What is it?
The key figure represents the forecasted result or outcome during a specified period. This ratio provides an overview of how the forecasted outcome accumulates over time and is useful for tracking the cumulative effect of the business's financial activities over time. This key figure provides an overview of the expected cumulative effect of the business's financial activities over time.
Cumulative means summing up or accumulating outcomes for different time periods (often months) over a certain period of time; in this case the current year. In other words, it is a cumulative or aggregated statement that shows the outcome so far.
How is it calculated?
Forecast summed up to specified time period
* Includes forecast for the current year.
Why is it important to follow?
Following the KPI is important for several reasons:
Financial planning: It provides a clear overview of the financial resources available to run the business during the specified time period. It is fundamental to developing a realistic and structured financial plan.
Cost control: By following the budget, the organization can keep track of its costs and avoid overruns. It helps maintain financial discipline.
Decision making: The budget serves as an important basis for making decisions about investments, projects and strategies. Having a clear understanding of the overall budget is critical in determining whether proposed actions are financially feasible.
Performance monitoring: The budget serves as a reference point for evaluating the organization's financial performance. It makes it possible to compare actual expenses and income with the planned figures and identify any deviations.
Resource prioritization: Knowing the total budget helps prioritize resource allocation. The organization can focus its resources on the areas that are most critical and strategically important.
In conclusion, it is important to follow the key figure because it is central to financial planning, cost control, decision making and performance monitoring. It provides a clear structure for managing financial resources and helps organizations achieve their financial goals.
Created by Homepal
3/4/2024
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