Final answer:
Analysts use projected cash flow statements to plan for short-term cash investments, ensuring adequate liquidity for a company's operations. This involves comparing present costs to the present discounted value of future benefits.
Step-by-step explanation:
Financial analysts use the projected cash flow statement primarily to plan for short-term cash investments. This financial tool is crucial for understanding how a company will manage its liquidity and ensure it has enough cash to cover upcoming expenses and investments.
By projecting future cash inflows and outflows, analysts can anticipate potential shortfalls or excesses in cash, which allows firms to make informed decisions about raising capital, whether through means such as early-stage investors, reinvesting profits, loans from banks or bonds, or selling stock.
Moreover, the process of making capital investments involves comparing the present costs with the present discounted value of future benefits, assessing the efficiency and profitability of the investment over time.