Chapter 3 Cash Forecasting

Question 1

is absolutely crucial to the operation of every organization.
If there is ever a cash shortfall, payroll cannot be met, suppliers are not paid, scheduled loan payments will not be made, and investors will not receive dividend checks. Any one of these factors can either bring down a business or ensure a change in its management in short order.

Answer 1

Cash forecasting

Question 2

are specificcash inflows and outflows that can be predicted
with a reasonable degree of accuracy

Answer 2

s scheduled items

Question 3

Under this method, the treasurer examines historical cash flows to create an estimate of the timing and amounts of future cash flows.

Answer 3

distribution method

Question 4

when a company runs into a materials or capacity
shortage and informs its customers that they are being put on an allocation basis.

Answer 4

BULLWHIP EFFECT

Question 5

The treasurer should implement policies that will assist in the management of two aspects of cash forecasting, which are the issuance frequency and review frequency of the forecasts

Answer 5

CASH FORECASTING POLICIES

Question 6

A formal _____ is least likely to be used if an experienced person prepares a forecast every day, but can be quite useful for more infrequent forecasting intervals or for training purposes, where there is less certainty about the various components of the forecast.

Answer 6

CASH FORECASTING PROCEDURE