An uncommitted but anticipated future transaction.

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An estimate of future financial performance is based on assumptions and usually expressed as a number. Forecasts are often used for budgeting, business planning, and strategic decision-making. They include predictions of sales revenue, expenses, cash flow, and profitability.

Example:

•   Retail Store: A clothing retailer forecasts a 20% increase in sales over the next quarter due to an upcoming holiday sale.

•   Technology Company: A software company predicts a 30% rise in subscription revenue next year because of a new product launch.

Real-Life Scenario:

A startup forecasts that it will increase its sales by £1 million next year after securing a major distribution deal. This forecast helps the company plan its budget and staffing needs.

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