Chapter 7

Interactive Business Forecasts Equations


Cash flow projections help companies plan for the future. Projections involve predicting the outcome of alternative business strategies, including the future of the business as a whole, success of an existing or proposed product line, and industry prospects. For example, projections might focus on near-term profits, demand for products, and services, production costs, financial needs, and timing of loan repayments. Cash flow forecasting enables management to change strategies at the proper time to maximize goals or to avert losses. This is especially true of companies whose management operates with solid knowledge of their firm’s nerve center: cash flow quality, magnitude, and ...

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