Financial projection

A financial projection shows the expected revenues, expenses, and cash flows of a business over a forecast period. This forecast may be used internally as the basis for a more detailed budget, or it may be presented to outsiders. In the latter case, a financial projection may be used to convince a lender to provide a business with a loan, or investors to buy shares in the firm.  A financial projection isbased on a combination of historical results, expectations for changes in the relevant market, and other changes in the circumstances of the business, such as an investment in a new product line.