Certified Supplier Quality Professional (CSQP) Practice Exam

Which financial term relates to projecting future costs and revenues?

1. A budget

2. A forecast

3. Actual costs

4. A variance

The correct answer is: A forecast

The selected answer is correct because a forecast is specifically focused on predicting future financial outcomes, including costs and revenues. In a business context, forecasting involves analyzing historical data and various market factors to estimate future financial performance. This helps organizations plan effectively and make informed decisions about resources, investments, and growth strategies. A budget, while also related to financial planning, typically involves setting a fixed plan for expenditures and revenues based on the available resources and expected income, rather than projecting future conditions. Actual costs reflect what has already been spent, and a variance measures the difference between expected (budgeted or forecasted) and actual performance. Thus, while related to financial management, they do not directly pertain to the act of projecting future costs and revenues as accurately as a forecast does.