What is the main purpose of financial forecasting?

The main purpose of financial forecasting is to estimate future financial outcomes. This process involves analyzing historical data and using various statistical methods to project future revenues, expenses, cash flows, and trends based on different scenarios. By producing these forecasts, businesses can make informed decisions regarding budgeting, resource allocation, and strategic planning.

Accurate financial forecasts help organizations anticipate changes in the market, prepare for potential challenges, and seize opportunities. These projections are critical for guiding decisions about investments, operational strategies, and financial management, ultimately supporting the overall success and stability of the business.

The other options may pertain to important business objectives, but they do not encapsulate the primary goal of financial forecasting, which is specifically focused on predicting future financial performance rather than directly influencing operational costs, customer relations, or maximizing investments at present.