CHAPTER 4- CASH FORECASTING

1. It is the process of producing an estimate or projection of the future financial status of a company

• 1. Cash Forecasting

• Cash Forecasting Method

• Cash Management

• 1. Working Capital Management

2. The cash forecast is the most important part of any cash management method.

• TRUE

• FALSE

3. What are the types of cash inflows and outflows that make up the cash forecast?

• Random items

• 1. Scheduled items

• 1. Unpredictable items

• 1. Unknown items

4. 4. Unexpected revenue is an example of a scheduled item.

• TRUE

• FALSE

5. Why is it important to include as many planned item as possible in the cash forecast?

• To make the company look better financially

• 1. To avoid overdraft fees

• 1. To impress stakeholders

• 1. To prepare for upcoming expenses and revenue

6. What is the distribution  method used for in the cash forecast?

• 1. To predict random cash flows

• To estimate expected revenue

• 1. To sum up smaller, scheduled items

• 1. To sum up smaller, scheduled items

7. By looking at past cash flows to estimate future cash flows is how the distribution method is used for cash forecast.

• TRUE

• FALSE

8. What is the main factor that can make a cash flow forecast inaccurate?

• 1. Accounts receivable

• 1. Account payable

• 1. Sales predictions

• 1. Competition in the market

9. What is the main recommended approach to ensure that a cash projection is accurate?

• Comparing past predictions to actual results

• 1. Ignoring problems with underlying systems

• 1. Relying on sales predictions only

• 1. Delying payment of bills

10. What can cause a delay in the forecast just before payment is due?

• 1. Incorrect account receivable data entry

• 1. Incorrect accounts payable data entry

• 1. Incorrect accounts payable data entry

• 1. Competition in the market