Answer
Following are some arguments for earnings projections;
1. Forecasts guide investment decisions. Management feels the responsibility to achieve the targets set in forecasts.
2. Forecasts engage all the stakeholders in the operations of the company. Forecasts establish expectations for all the internal and external stakeholders, especially management and employees.
3. For some companies, historical information might be depressing if they have been at a loss. In such cases, forecasts of profitability motivate management to achieve higher targets.
4. Forecasts set the benchmark against which performance can be measured.
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