Understanding cash flow forecasts:

• Cash inflows include sales revenue and investment.


  True
• What are two key uses of cash flow forecasts for businesses?

  Planning and decision-making
• Order the benefits of cash flow forecasts for businesses:

  1️⃣ Planning for future cash needs

  2️⃣ Identifying potential cash shortages

  3️⃣ Managing liquidity

  4️⃣ Budgeting and financial planning
• Cash flow forecasts help businesses plan for future cash needs
• The closing balance is calculated by adding inflows, subtracting outflows, and adding the opening balance
• Analyzing historical data is a technique for preparing cash flow forecasts.

  True
• Match the component of a cash flow forecast with its description:

  Cash Inflows ↔️ Money coming into the business

  Cash Outflows ↔️ Money leaving the business

  Opening Balance ↔️ Cash at the start of period

  Closing Balance ↔️ Cash at the end of period
• The opening balance in a cash flow forecast represents the cash at the start of the period.


  True
• Match the component of a cash flow forecast with its description:

  Cash Inflows ↔️ Money coming into the business

  Cash Outflows ↔️ Money leaving the business

  Opening Balance ↔️ Cash at the start of the period

  Closing Balance ↔️ Cash at the end of the period
• Arrange the components of a cash flow forecast in the correct order.

  1️⃣ Cash Inflows

  2️⃣ Cash Outflows

  3️⃣ Opening Balance

  4️⃣ Closing Balance
• Match the cash flow forecasting technique with its description:

  Historical Data ↔️ Analyzing past cash flow patterns

  Sales Forecasting ↔️ Estimating future sales revenue

  Expense Budgeting ↔️ Planning for future expenses

  Sensitivity Analysis ↔️ Modeling different scenarios
• Cash flow forecasts help businesses allocate resources effectively for purchasing inventory.
• Cash flow forecasts should be updated monthly or quarterly to maintain accuracy.


  True
• The opening balance is the cash balance at the start of the period
• Cash flow forecasts enable businesses to manage their liquidity.


  True
• What is the typical period covered by a cash flow forecast?

  12 months
• What are two examples of cash inflows in a cash flow forecast?

  Sales revenue and loans
• What is one technique for preparing cash flow forecasts?

  Sales forecasting
• Accurate timing is crucial for recording inflows and outflows
• What are cash flow forecasts used to project?

  Cash inflows and outflows
• How often are cash flow forecasts typically broken down?

  Monthly
• Cash flow forecasts provide the basis for budgeting and financial planning.


  True
• One technique for preparing cash flow forecasts involves analyzing historical data.
• What decisions can businesses make based on cash flow forecasts to address potential shortages?

  Financing or cost-cutting
• Arrange the steps for analyzing and interpreting cash flow forecasts in the correct order.

  1️⃣ Review the Components

  2️⃣ Identify Trends

  3️⃣ Spot Potential Issues

  4️⃣ Adjust Strategies

  5️⃣ Regular Review
• What is the primary purpose of cash flow forecasts?

  Predict cash inflows and outflows
• Match the component of a cash flow forecast with its description:

  Cash Inflows ↔️ Money coming into the business

  Cash Outflows ↔️ Money leaving the business

  Opening Balance ↔️ Cash balance at the start

  Closing Balance ↔️ Cash balance at the end
• Cash flow forecasts help identify potential cash shortages
• Match the component of a cash flow forecast with its description:

  Cash Inflows ↔️ Money coming into the business

  Cash Outflows ↔️ Money leaving the business

  Opening Balance ↔️ Cash at the start of period

  Closing Balance ↔️ Cash at the end of period
• Cash flow forecasts are used for budgeting and financial planning.


  True
• Arrange the timing considerations for cash flow forecasts:

  1️⃣ Record inflows in the month received

  2️⃣ Record outflows in the month paid

  3️⃣ Use the previous month's closing balance as the opening balance
• What does expense budgeting involve in cash flow forecasting?

  Planning future expenses
• Why are cash flow forecasts essential for liquidity management?

  Ensure sufficient cash
• Cash flow forecasts are essential for effective liquidity management.
• Cash flow forecasts help businesses plan for future cash needs, such as purchasing inventory.
• Why is it vital to record inflows and outflows in the month they occur?

  To ensure an accurate forecast
• Timing is crucial when recording inflows and outflows in a cash flow forecast.


  True
• What is the purpose of analyzing and interpreting cash flow forecasts?

  To understand cash flow patterns