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Hindbærbrus: Planning horizon

2018-10-09T10:00:50Z

Planning horizon

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A '''time horizon''', also known as a '''planning horizon''', is a fixed point of time in the future at which point certain processes will be evaluated or assumed to end. It is necessary in an [[Accountancy|accounting]], [[finance]] or [[risk management]] regime to assign such a fixed horizon time so that alternatives can be evaluated for performance over the same period of time. A time horizon is a physical impossibility in the real world.

Although short term horizons such as [[end of day]], end of week, end of month matter in accounting, generally it is mere summing-up and the simplest [[mark to market]] processes that take place at these short term horizons. No [[scenario analysis]] or mark to future activities are usually undertaken for such short periods, except for very large portfolios.

The most common horizons used in planning are one "quarter" (a quarter year, or three months), a year, two years, three years, four years (especially in a [[representative democracy]] where this is a quite common [[term of office]] and election cycle) and five years (in corporate planning). More far-sighted companies and government agencies may also use between ten and one hundred years. Thirty years is often used in [[mortgage loan|mortgage]] contracts and [[Treasury security#Treasury bond|US Treasury bond]]s such as the "long bond". One hundred years, sometimes considered equal to seven generations, is a time horizon often cited by the ancient [[Iroquois]] and modern [[Green movement|Greens]]. The [[Forestry Commission]] in the UK plans over a century into the future.

Agreeing on a common time horizon for action is particularly important in global policy, as each participant will have very different time horizon habits. Achieving [[simultaneous policy]] is quite difficult without an agreement, as those taking action early may be seriously disadvantaged in competition with those taking action late on a regulatory matter. One attempt to bring about a global simultaneous policy is being attempted by the [[International Simultaneous Policy Organization]]'s SIMPOL campaign.<ref name="Campaign concept">[http://www.simpol.org.uk/index.php?id=8 Simpol.org - Campaign concept]</ref>

Also, in terms of physics, the term "time horizon" is also synonymous with [[event horizon]], first identified in [[Stephen Hawking]]'s [[A Brief History of Time]].{{Citation needed|date=May 2011}} Hawking stated that the time horizon is the boundary that separates a [[black hole]] from other celestial bodies. Even time and light cannot escape once trapped in the black hole.

==See also==
*[[Planning horizon]]
*[[Gap financing]]
*[[Long term]]
*[[Race to the bottom]]
*[[Timetable (disambiguation)]]

== References ==
{{reflist|30em}}

{{DEFAULTSORT:Time Horizon}}
[[Category:Business planning]]

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