Case Analysis

Areas of Statement Important to the Company

Financial statement forecasts are important to a business as they act as a guide to where a business is heading to( Kroos et al., 218). Forecasted income statement, balance sheet, and statement of cash flow provide an idea to various users on the future direction of the business so that they can decide on whether or not to invest in the business. There are various areas of financial statements important to a company including Disney Corporation. Firstly, revenues and expenses help a company to discover its success in the business and provide a better view of the future profitability.

Assets owned by a company helps it gauge the available resources as at a particular point in time. It also assists the business to discover the amount of collateral it can provide as a security to access loans from financial institutions. Assets will also show the reliability of the company to service the loan and repay the principal amount. Cash and cash equivalent projections help the company to avoid running out of cash which may result into disruptions of operations. It assists a company to find out the extra cash required to support the increasing revenues and the impact on the balance sheet.

Impact the Economy/Industry has on the Forecast

Forecasting in business is important because it allows planning for financing, production, and marketing among other activities (Kroos et al., 2018) . However, businesses are vulnerable to economic or industry changes. For instance, any unexpected event in the economic environment would limit the reliance on forecasted statements. Forecasts are also based on historical data from the industry and there is no assurance that the trend would extend in the future. These situations limit reliability on the forecasted statements.

Reference

Kroos, P., Schabus, M., & Verbeeten, F. (2018, August). The Relation between Internal Forecasting, Misreporting and the Importance of Meeting Performance Benchmarks. AAA.