Cash Flow Forecasts

Question 1

Use of cash flow forecasts

Answer 1

. Identifying the timing of cash shortages and surpluses
. Supporting applications for finance
. Enhancing the planning process
. Monitoring cash flow

Question 2

Limitations of cash flow forecasts

Answer 2

. Reliance on estimates
. Influence of external factors
. Resource consumption for forecast preparation
. Narrow focus on cash

Question 3

Purpose and importance of sales forecasts

Answer 3

. Resource alllocation
. Financial implications
. Planning for growth
. Risk management

Question 4

Methods of sales forecasting

Answer 4

. Time series analysis
. Market research
. Expert opinion

Question 5

Key pattern in time series

Answer 5

. Trends
. Seasonal fluctuations
. Cyclical fluctuations
. Random fluctuations
Extrapolation

Question 6

Factors affecting sales forecasts

Answer 6

. Consumer trends
. Economic variables: economic growth, interest rates, inflation, unemployment, exchange rates
. Actions of competitors: new market entrants, promotional activities, pricing strategies, product launches

Question 7

Benefits of sales forecasting

Answer 7

. Improved decision-making
. Efficiency
. Financial planning
. Coordination

Question 8

Difficulties of sales forecasting

Answer 8

. Data reliability
. Volatile consumer preferences
. Uncertain external environment
. Subjectivity
. Time lag
. Over-reliance on past trends