ABSTRACT
Financial analysis has been shown to be an essential basis for planning, as without any information to go on it is pointless to expend a great deal of time, effort and funds on financial planning. Analysing the past is largely based on known financial data (even though the preparation of financial statements requires the use of managerial judgements) whereas planning for the future means trying to achieve desired ends based on extrapolations, estimates and forecasts which are subject to significant errors and changes outside the control of any company. Therefore, even when the financial analysis has been comprehensive and rigorous, the only certain statement about a financial plan is that ‘it will be wrong’.
