Financial forecasting is the process of estimating future financial outcomes for a business based on historical data, trends, and assumptions. It involves predicting future revenues, expenses, cash flows, and other financial metrics over a specific period, typically one to five years. Financial forecasting helps businesses make informed decisions, plan budgets, assess funding needs, set performance targets, and evaluate the feasibility of strategic initiatives. It also enables businesses to anticipate potential challenges and opportunities, allowing for proactive management of financial resources.