Applied Current Event Knowledge Expander related to Financial Forecasting - Essay Example

Current Event Implication to Management Current Event Implication to Management Financial forecasting is the estimate prepared by financial analyst, and are put, in place from, which firms can oversee and prepare for the future. It provides a plan by which a firm can set its goal and objectives, and ensure that they are also achieved. By having a glimpse of how the future is likely to be like, firms can go ahead and identify assets required, and if they might need external financing, in their bid to prepare for the future.

This paper, therefore, identifies how knowledge of current events relates to financial forecasting, how it can be applied in managerial finance, and how it affects the overall economy. Financial forecasting is usually based on the historical financial performance data of firms. This information and the current market trend are usually utilized to predict the future performance of a business in the ever changing global markets. However, with the current recession, which have resulted in global melted down, and most countries’ economies strained the market has tended to be unstable.

Most firms’ financial forecasting has posted little, or no growth. This has inflicted fear to the masses who might have wanted to invest in the company. Individuals seeking to invest normally look to invest in companies with a history of strong earnings, and those that often come above the estimates since they feel secured (McWilliams, 2012). Most managers may feel pressurized to meet the forecasted estimates. However, managers are advised necessarily not to be pressurized to meet the long-term growth forecast.

This is because most forecast estimates tend to have upward projections, and most managers might consider them to be Capital market target, but this is usually not true. In fact, capital markets have always involved future forecast revisions into the current market share price. The market does not necessarily expect managers to meet the forecast, and managers dimed to be pursuing unrealistic forecasted growth, in order to meet long-term forecasted projection should be seen as a risk. This is because, by engaging in high-risk, high-growth projects, or may be shift their attention from managing current businesses efficiently to chase transaction design to meet the forecasted figured, they are likely to destroy the market actual value.

In relation to this reasons, managers should not invest much time trying to tailor accounting and funding methods just to stay in line with the forecasts set. This may lead to disgruntlement among employees, as they might not be happy with the new setup, reducing their output and the firm might end-up not even meeting the short-term goals (McWilliams, 2012). The war on terrorism is something that has affected the financial aspect of most firms negatively. It has led to shrinking of the market for firms that had gone global as well as discouraging those firms that aspire to go global.

Globalization was an element which financial forecasting analyst considered when carrying out the forecasting process. However, the rise in political instability in most regions, which were considered new markets has lead to fear of terror attack. This aspect has led to more restriction on mobility of goods, people, and capital. Managers, therefore, are advised to consider the aspect of war on terrorism and recalculate the momentum and direction of trade and economic liberalization. They will have to put into consideration the factor of new costs, barriers and uncertainties.

This aspect has had a negative impact on the economy (McWilliams, 2012). In conclusion, current events have a direct relation to financial forecasting and managers should consider these factors when going about the managerial business especially where finance is concerned. Reference McWilliams D. (March 28, 2012). Next Stage for Economy isnt Recovery - its Mass Default . Irish Independent , 1. Retrieved from: http://www.davidmcwilliams.ie/2012/03/28/next-stage-for-economy- isnt-recovery-its-mass-default