Understanding cash flow forecasts:

• Cash flow forecasting involves predicting both cash inflows and cash outflows.


  True
• Cash flow forecasts help businesses prepare for both cash shortages and surpluses.

  True
• Accurate cash flow forecasts are crucial for effective business decision-making.

  True
• Cash flow forecasts allow businesses to predict and prepare for cash shortages and surpluses.


  True
• What format for a cash flow forecast allows for detailed calculations and "what-if" scenarios?

  Spreadsheet
• Cash flow forecasting helps businesses plan and manage their finances
• Cash flow forecasts are essential for effective business decision-making and operations.


  True
• What are examples of cash outflows for a business?

  Supplier payments and wages
• Analyzing historical data is a method for preparing a cash flow forecast.


  True
• To create an accurate cash flow forecast, it is essential to combine historical data with reasonable assumptions
• The amount of cash a business starts with in a cash flow forecast is called the opening balance
• An example of a cash inflow is sales revenue
• Cash flow forecasts help identify periods where cash outflows may exceed cash inflows
• What is predicted in cash flow forecasting to help businesses manage their finances?

  Cash inflows and outflows
• Why is identifying a period of cash surplus important?

  To utilize excess cash
• The closing balance is calculated by adding cash inflows to and subtracting cash outflows from the opening balance
• Using historical data and reasonable assumptions is key to creating an accurate cash flow forecast.


  True
• Match the example of a cash inflow with its type:

  Sales revenue ↔️ Cash inflow

  Supplier payments ↔️ Cash outflow
• What do accurate cash flow forecasts enable businesses to do?

  Anticipate and respond
• Cash flow forecasts help identify periods where cash outflows may exceed cash inflows
• The amount of cash a business has at the beginning of the forecasting period is called the opening balance
• The closing balance is calculated by adding cash inflows to and subtracting cash outflows from the opening balance
• What is the purpose of making assumptions when preparing a cash flow forecast?

  To predict future events
• What is the primary advantage of presenting a cash flow forecast in a spreadsheet format?

  Detailed calculations and scenarios
• Cash flow forecasts are only useful for predicting cash surpluses, not shortages.

  False
• What is the role of historical data in preparing a cash flow forecast?

  To identify patterns and trends
• What is the purpose of cash flow forecasting?

  Predict future cash movements
• What is an example of a cash outflow?

  Employee wages
• What action might a business take if a cash flow forecast identifies a shortage?

  Secure additional financing
• Supplier payments are an example of a cash outflow
• Match the component of a cash flow forecast with its description:

  Opening Balance ↔️ Cash at the start of forecasting

  Cash Inflows ↔️ Money coming into the business

  Cash Outflows ↔️ Money leaving the business

  Closing Balance ↔️ Cash at the end of forecasting
• Steps for preparing a cash flow forecast:

  1️⃣ Analyze historical data

  2️⃣ Make assumptions about future events

  3️⃣ Decide on forecasting time periods
• Steps in responding to a cash shortage identified by a cash flow forecast:

  1️⃣ Identify the period of shortage

  2️⃣ Secure additional financing or delay payments

  3️⃣ Monitor cash flow closely
• Cash flow forecasts help businesses predict and prepare for cash shortages and surpluses.

  True
• What action can a business take if a cash flow forecast predicts a cash shortage?

  Secure additional financing
• What are examples of cash inflows for a business?

  Sales revenue and loan proceeds
• Steps for preparing a cash flow forecast

  1️⃣ Analyze historical data

  2️⃣ Make assumptions about future events

  3️⃣ Decide on the forecasting time periods
• Match the cash flow forecast format with its description:

  Spreadsheet ↔️ Detailed calculations and scenarios

  Visual Dashboard ↔️ High-level, easy-to-understand overview

  Narrative Report ↔️ Includes explanations and commentary
• Why do cash flow forecasts help businesses avoid cash shortages?

  By predicting outflows exceeding inflows
• Using a combination of historical data and assumptions is crucial for an accurate cash flow forecast.


  True