Question

Preparing a cash flow forecast helps a company to do which of the following?

(a) Avoid financial problems
(b) Make better financial decisions
(c) Improve its profitability
(d) All of the above

Answer 1

A cash flow forecast helps a company avoid financial problems, make better financial decisions, and improve profitability.

Step-by-step explanation:

A cash flow forecast helps a company to avoid financial problems, make better financial decisions, and improve its profitability. By accurately predicting the inflows and outflows of cash, a company can plan its expenses, identify potential cash shortages, and take necessary measures to address them.

For example, if a company forecasts a cash shortage in the future, it can arrange for additional financing or adjust its spending to avoid financial difficulties.