Chapter 12 Forecasting and Short-Term Financial Planning

A photo of a gear, wrench, and nut and bolt set.

Learning Objectives

  1. LO1 Understand the sources and uses of cash in building a cash budget.

  2. LO2 Explain how companies use sales forecasts to predict cash inflow.

  3. LO3 Understand how production costs vary in terms of cash flow timing.

  4. LO4 Explain possible ways to cover cash deficits and invest cash surplus.

  5. LO5 Prepare a pro forma income statement and a pro forma balance sheet.

Is the future uncertain? Yes. Can we plan for it? Indeed! One task of a finance manager is to forecast for the coming period. Forecasting is the process of analyzing a company’s current and historical data to ...

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