Using Cash-flow Forecasting

Question 0

Sources of information for a cash flow forecast

Answer 0

• previous forecasts
• banks
• consumer research

Question 1

Factors influencing cash-flow problems

Answer 1

• amount of cash held at the beginning of the cycle
• length of time required to convert inputs into outputs
• level of credit payments by consumers

Question 2

Causes for inaccuracies

Answer 2

• changes in economy
• changes in consumer tastes
• uncertainty
• inaccurate market research

Question 3

Structure of cash flow forecasts

Answer 3

Cash inflow
Cash outflow
Net cash flow (cash inflows-cash outflows)
Opening balance and closing balance

Question 4

Why business forecast cash -flow

Answer 4

• identify cash-flow problems before they happen
• guide firm to appropriate action
• make sure sufficient cash is available for payments