Explain the term "financial forecasting."

Financial forecasting refers to the process of estimating future financial outcomes by analyzing historical data and trends. This practice involves reviewing previous performance metrics, market conditions, economic indicators, and other relevant information to project future revenue, expenses, and overall financial health of an organization or project.

Using historical data allows organizations to identify patterns and trends that can influence future performance, thus enabling them to make informed decisions about budgeting, investment opportunities, and strategic planning. By understanding how past financial behavior correlates with external factors, managers can create more accurate projections about future financial scenarios. This method not only guides businesses in planning but also assists in risk management and resource allocation, making it a vital tool in the budget planning and program process.

The other options focus on aspects like current expenses and performance monitoring, which, while important, do not encompass the broader analytical approach that defines financial forecasting.