Financial Plans Are Statements of Goals as Well as Predictions

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The Answer is Virtually all financial plans are presented as statements of what is likely to happen in the future. However, plans also generally contain organizational goals. A problem is created if goals are set beyond the organization's capability for motivational purposes. Then the plan becomes a statement of what management would like to see happen rather than of what is actually expected. Most business plans are actually combinations of less than achievable goals and more realistic expectations. This makes it difficult to rely on what the plan says, especially in discussions outside the company. For example the published plan may understate cash needs because it's overly optimistic about profitability. This creates a major problem in that we can't rely on the plan's cash implications in discussions with our bank about next year's borrowing.

Financial Plans Are Statements of Goals as Well as Predictions

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