Financial forecasting is the process of using historical data to understand and predict financial trends that allow businesses to make informed decisions about their future. This can include analyzing income and expenses, creating budget projections, predicting cash flow needs, and estimating returns on investments. Financial forecasting allows businesses to anticipate economic conditions and plan for the future, giving them an edge in an ever-changing economy. By understanding their financial health and staying ahead of potential market changes, businesses can be better positioned to succeed.