Final answer:
Sales projections and accurate future predictions are crucial for impacting cash flow targets, with stock prices and investment decisions hinging on these expectations. Positive cash flow enables reinvestment and subsequent business growth.
Step-by-step explanation:
True. Sales projections and the ability to predict future expectations accurately have a large impact on a company's cash flow targets. The expectations surrounding a company's future performance can greatly influence the stock price, as the stock market is heavily based on expectations about the future. If expectations shift, then the stock price will likely shift in accordance. Analysts and investors spend considerable time researching and analyzing companies that are currently undervalued but have the potential to succeed in the future.
Furthermore, cash flow generated by a company can be reinvested back into the business, leading to growth through improving facilities, hiring additional labor, or purchasing technology. This reinvestment can lead to increased production, sales, and subsequently, a larger cash flow in the next sales period. As long as the cash flow is positive and exceeds the depreciation of assets, the company is poised for continued growth.