Prepairing for Launch - Module 2 Financial Forecasting Flashcards
What is the purpose of financial projections in a startup?
Financial projections help assess the potential success and scope of a startup by estimating revenue, expenses, and cash flow.
What is the difference between bottom-up and top-down forecasting?
Bottom-up forecasting estimates revenue starting with customer acquisition and scales upward, while top-down assumes capturing a percentage of the total market.
What are the key elements of financial projections?
Key elements include sales revenue, growth rates, expenses, and cash flow requirements.
Why are revenue drivers important in financial forecasting?
Revenue drivers help determine how much income a startup can generate and the factors influencing its growth.
What is sensitivity analysis in financial forecasting?
Sensitivity analysis explores best, worst, and likely scenarios to assess financial risks and opportunities.
Why are CAC and CLTV important metrics for investors?
CAC and CLTV demonstrate the cost of acquiring customers and their value over time, helping evaluate profitability.
What are common sources of startup financing?
Common sources include debt, equity, angel investors, venture capital, and alternative financing methods.
What do investors look for in financial forecasts?
Investors seek clear, concise forecasts supported by reasonable assumptions, cash budgets, and detailed metrics.
What is the role of operational costs in financial projections?
Operational costs, such as customer acquisition and administrative expenses, determine the sustainability of a startup’s finances.
Why is cash flow management critical for startups?
Cash flow management ensures that a startup can meet its operational expenses and scale sustainably.
