What is Financial forecast vs financial projection?
In short
A financial forecast presents an entity's expected financial results based on the conditions it expects to exist. A financial projection presents results under one or more hypothetical assumptions, such as building a new plant.
Key takeaways
- Forecasts may be for general use; projections are for limited use by parties negotiating directly with the entity.
- Both are prospective financial statements that practitioners can examine, compile or apply agreed-upon procedures to.
- Neither can be reviewed under the attestation standards.
Where it's tested
BAR: Financial Forecasting, Budgeting & Valuation — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
The essential difference between a financial forecast and a financial projection is that a projection: