Cash Flow Projection Statement, Meaning Expenditures And Sales

1580 Words Mar 28th, 2015 7 Pages
“Cash-flow projection statements are about the state of future cash flows, which means they require forecasts. This translates into multiple forecasts—sales forecasts, forecasts of expenses, forecasts for necessary investments, and forecasts for a business’s financing requirements.” (Cadden and Lueder, 2015.) Using a cash flow projection statement to forecast future inflows and outflows is especially vital when managing the finances of a small business. It allows for business owners to prepare and plan for a future fiscal period. To come up with an accurate cash flow forecast, the business owner should closely examine and analyze the company 's historic cash flow statement, meaning expenditures and sales. By examining the statement it can be predicted when there will be an increase sales, and when there may be a dip. This allows the business owner to be prepared with the correct amount of inventory, and to plan for the financial ups and downs.

While there are many ways to forecast for a financial period, many of them are too extensive to be used in a small business setting. However, there is a more simple way for these small business owners to go about it. The first step is to estimate how much money the company will be bringing either weekly or monthly. Like previously mentioned, the best way to do this is to look at the sales history for previous years in regard to each month. By doing this one can get an idea of what kind of sales to expect for any given month or…

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