FORUM (Far-infrared Outgoing Radiation Understanding and Monitoring) will fly as the ninth ESA's Earth Explorer mission, and an end-to-end simulator (E2ES) has been developed as a support tool for the mission selection process and the subsequent development phases. The current status of the FORUM E2ES project is presented together with the characterization of the capabilities of a full physics retrieval code applied to FORUM data. We show how the instrument characteristics and the observed scene conditions impact on the spectrum measured by the instrument, accounting for the main sources of error related to the entire acquisition process, and the consequences on the retrieval algorithm. Both homogeneous and heterogeneous case studies are simulated in clear and cloudy conditions, validating the E2ES against appropriate well-established correlative codes. The performed tests show that the performance of the retrieval algorithm is compliant with the project requirements both in clear and cloudy conditions. The far-infrared (FIR) part of the FORUM spectrum is shown to be sensitive to surface emissivity, in dry atmospheric conditions, and to cirrus clouds, resulting in improved performance of the retrieval algorithm in these conditions. The retrieval errors increase with increasing the scene heterogeneity, both in terms of surface characteristics and in terms of fractional cloud cover of the scene.