CFO Edge Logo
  Home > Resources > Cash Flow Forecasting  

Cash Flow Forecasting

  Arthur F. Rothberg, Managing Director, CFO Edge, LLC  
  Open as PDF Open the entire article as a PDF  
  Article Summary  

A cash flow forecast, or cash flow projection, is a key element of financial strategy that supports near-term financial processes, overall capital structure and asset valuations.

Included in this CFO Edge article is a look at the eight ways cash flow forecasting helps a company assert control of its financial situation. Both direct and indirect methods of cash flow forecasting are addressed with the former including the receipts and disbursements method, while indirect methods reviewed include adjusted net income, pro-forma balance sheet and accrual reversal.

The six basic steps involved in developing a direct-method cash flow projection are discussed, and the article looks at strategies for addressing potentially problematic activity ratios such as days sales outstanding, days payments outstanding and inventory turns. The article also comments on the importance of creating balanced credit policies so that they are neither overly strict nor overly lax.

Proactive cash flow management requires a systematic approach, and the cash flow forecast should be thought of as a living document that helps a business make investments with confidence, plan capital expenditures strategically and set reasonable goals.

  Open the entire article as a PDF  
Subscribe to CFO Inside Edge

Our monthly newsletter delivers first notice of new white papers and articles plus remarks on performance challenges and solutions. View past issues and subscribe.

CFO or Controller: What's Right for Your Business?
White Paper
CFO or
What's Right
for Your
Outsourced CFO Services
White Paper
CFO Services
Performance Measurement
White Paper
Performance Measurement
Strategic Planning & Forecasting
Year-End Strategic Planning & Forecasting
Planning a Business Exit White Paper
White Paper
Planning a
Business Exit
CFO Edge Blog CFO Edge on Twitter CFO Edge on LinkedIn
Intuit Certifications