ENTREPRENEURIAL PLANNING
FINANCIAL PLANNING AND ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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It may be informed by market research
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It might give confidence about short-term survival
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It may identify possible corrective action
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It may show that the business makes a loss
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Detailed explanation-1: -You cannot equate the cash flow statement with the income statement of a business entity. Since an income statement takes into consideration both cash as well as non-cash transactions, the net cash flow arising from the cash flow statement need not necessarily depict the net income of the business.
Detailed explanation-2: -Cash Flow Statement is prepared on an estimated basis meant for the successing/next year which helps the management to know how much funds are required for what purposes, how much cash is generated from internal sources, how much cash can be procured from outside the business. It helps also to prepare cash budgets.
Detailed explanation-3: -There are three key elements to include in a cash flow forecast: your estimated likely sales, projected payment timings, and your projected costs.