Forecasting

cash flows
• Cash forecast is an estimation of the flows in and out of the
firm cash account over a particular period of time, usually a
quarter, month, week or dau. The cash forecast is primarily
intended to produce a very useful piece of information an
estimation of the firms borrowing and lending needs and
the uncertainties regarding these needs during various
future periods .cash forecast is extremely important to
most firms it enables them to anticipate periods of surplus
cash and periods where financing will be necessary
anticipation enables the firm to plan much more effectively
for investment and financing and this planning produce
superiors returns.
 Need to focus on cash
• Forecasting efforts on cash flows is
focussed because of the availability of
accounting data. information relating to
accounts of past years is available and
forecasting is done on that basis ,
managers are sometimes tempted to focus
on earnings unfortunately earnings are not
very useful for cash management earnings
represent an important accounting concept
that attempts to match revenues concept
that attempts to match revenues with the
expenses that generated them.
Cash forecasting horizons