E1 - Cash Flow Forecasts Flashcards
1
Q
What is a cash flow forecast?
A
It’s an educated prediction of what the future revenue and expenditure may be like over a period of time.
2
Q
What are the advantages and disadvantages of using cash flow forecasts?
A
+ It helps monitor cash flow and anticipate where corrective action needs to be taken & can be used as part of a business plan to help secure finance.
- It’s just an assumption, therefore might be inaccurate, unforeseen changes can impact the forecast such as a change in material costs & takes time to produce.
