What is a 'cash-flow projection'?

Select an answer:

1. Forecasting how much cash will be collected, and how it will be invested
2. Forecasting how much cash must be paid out, and how much is needed to pay that cash out
3. Forecasting how much cash to invest, and how much can be used to pay obligations
4. Forecasting how much cash will be collected, and how much must be paid out

Question

09-03-2025
History

High School

We appreciate your visit to What is a cash flow projection Select an answer 1 Forecasting how much cash will be collected and how it will be invested 2 Forecasting. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!

What is a 'cash-flow projection'?

Select an answer:

1. Forecasting how much cash will be collected, and how it will be invested
2. Forecasting how much cash must be paid out, and how much is needed to pay that cash out
3. Forecasting how much cash to invest, and how much can be used to pay obligations
4. Forecasting how much cash will be collected, and how much must be paid out

Answer :

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ElijahBenjaminCarter ElijahBenjaminCarter · Answer 1 · 2025-01-04T19:44:01-05:00

A cash-flow projection is a financial tool used to estimate the amount of cash a business will receive and spend over a certain period of time.

By forecasting this flow of cash, businesses can ensure they have sufficient funds to cover expenses, make informed financial decisions, and plan for future financial needs. It helps in managing liquidity, avoiding cash shortages, and identifying potential financial problems before they arise.

This projection is essential for budgeting and financial planning, as it provides a clearer picture of expected cash inflows and outflows. It includes:

Forecasting Cash Inflows: Estimating the cash expected to be received during a specific period from sales, investments, and other sources.
Forecasting Cash Outflows: Estimating the cash expected to be spent or paid out during the same period on expenses like salaries, rent, utilities, and other liabilities.

Given the options you provided, the correct choice is:

Forecasting how much cash will be collected, and how much must be paid out.

By using a cash-flow projection, businesses can better plan for times when they'll need to borrow money, as well as anticipate times when they'll have excess cash that could be invested or saved. This proactive financial management tool is crucial for maintaining the financial health of an organization.