What is a cash flow forecast?

What is a cash flow forecast?

• A. A budget for marketing campaigns
• B. A forecast of product prices
• C. A projection of cash inflows and outflows over time
• D. A plan for hiring

Answer: (C)

A cash flow forecast is a projection of cash inflows and outflows over time. It shows when money is expected to come in (like sales receipts) and when it’s expected to go out (such as payroll, rent, and supplier payments). This focus on the timing of cash helps you see whether you’ll have enough cash to meet obligations and where gaps or surpluses might occur, so you can plan borrowing, cut costs, or adjust spending as needed. It’s different from budgeting for marketing, forecasting product prices, or planning hiring, which don’t directly track the timing of cash movements.

A cash flow forecast is a projection of cash inflows and outflows over time. It shows when money is expected to come in (like sales receipts) and when it’s expected to go out (such as payroll, rent, and supplier payments). This focus on the timing of cash helps you see whether you’ll have enough cash to meet obligations and where gaps or surpluses might occur, so you can plan borrowing, cut costs, or adjust spending as needed. It’s different from budgeting for marketing, forecasting product prices, or planning hiring, which don’t directly track the timing of cash movements.