What aspect of forecasting helps determine necessary budget adjustments?

Assessing growth and investment opportunities is key to forecasting because it provides insights into potential revenue streams and market demands. By identifying areas where the company can expand or enhance its offerings, decision-makers can project future income and assess the resources required to pursue those opportunities. This analysis directly impacts budgeting, as it may reveal the need for increased investment in certain areas or adjustments to existing allocations to support strategic goals.

In contrast, evaluating previous year's financial statements primarily helps in understanding past performance but may not necessarily lead to proactive budget adjustments based on future growth. Conducting employee performance reviews is important for workforce management and development but does not typically influence budget adjustments related to market conditions or growth initiatives. Reviewing market competition is valuable for strategic positioning; however, while it may inform budgeting decisions, it does not directly connect to necessary funding for growth initiatives in the same way that assessing opportunities does.