Definition of forecasting

1. in Asset-Liability Management, an estimate of future expectations based on historical information, current and projected market conditions, and management assumptions about interest rates and market demand for credit. As used in an asset-liability model, forecasting is a planning tool that estimates the amount of interest earning assets and interest sensitive liabilities to try to determine whether the balance sheet will be asset sensitive or liability sensitive during specific time periods in the future. The forecast is normally revised periodically as market conditions or management assumptions change. See also dynamic gap.
2. in corporate cash management, an estimate of future cash receipts from conversion of assets into cash. Forecasting tries to anticipate changes in cash flow for purposes of funds management and debt management.
3. projecting corporate earnings, financial institutions, sales, and so on in future time periods. See also econometrics.

projecting current trends using existing data.

Forecasting can also refer to various projections used in business and financial planning.