Projecting First-Year Financial Performance on Monthly Basis and Subsequent Yearly Budgets on Quarterly Basis

Financial Analysis and Capital Formation Coursework
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Why is it important to project the first-year financial performance on a monthly basis and the subsequent yearly budgets, on a quarterly basis? Explain.
Projecting the first-year financial performance monthly is vital because it is infeasible to conduct trend analysis and forecasting when there is no past data. In projecting the first-year financial performance, the accountant lacks past data that could be analyzed to predict future performance (Yantiana & Rusmita, 2020). For this reason, the company should use monthly forecasting in the first year of its operations. In this vein, the company could compare the performance between two or more months and thus make changes based on their forecast. In addition, monthly forecasting is necessary when the company has limited resources to develop a strategic long-range plan and delineate specific plans and initiatives to implement it. It is hard to perform a gap analysis concerning where the company wants to go compared to its current position due to the lack of a clearly defined strategy (Serven & Krumwiede, 2019). It is possible to translate specific initiatives into short-term milestones...