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Cash Flow Projection Video Lecture | Entrepreneurship Class 12 - Commerce

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FAQs on Cash Flow Projection Video Lecture - Entrepreneurship Class 12 - Commerce

1. What is a cash flow projection?
Ans. A cash flow projection is a financial statement that estimates the amount of cash inflows and outflows over a specific period, typically monthly or quarterly. It helps businesses understand and plan for their future cash flow and is a crucial tool for financial management.
2. Why is a cash flow projection important for businesses?
Ans. A cash flow projection is important for businesses because it provides valuable insights into the company's financial health and helps in making informed decisions. It allows businesses to anticipate any potential cash shortages or surpluses, plan for investments, manage expenses, and ensure that there is enough cash to cover operational needs.
3. How is a cash flow projection prepared?
Ans. To prepare a cash flow projection, businesses need to estimate their expected cash inflows from sources such as sales, loans, or investments, as well as their anticipated cash outflows, including expenses, salaries, and loan repayments. By subtracting the cash outflows from the cash inflows, a net cash flow for each period can be determined and used to create the projection.
4. What are the benefits of regularly reviewing cash flow projections?
Ans. Regularly reviewing cash flow projections allows businesses to monitor their financial performance, identify any deviations from the projected cash flow, and take corrective actions if necessary. It helps in managing cash flow effectively, making adjustments to expenses or revenue generation strategies, and ensures that the business remains financially stable and sustainable.
5. Can a cash flow projection help in securing financing or attracting investors?
Ans. Yes, a cash flow projection can be instrumental in securing financing or attracting investors. Lenders and investors often require businesses to provide a cash flow projection as part of their evaluation process. It demonstrates the business's ability to generate sufficient cash to meet its financial obligations and repay loans. A well-prepared cash flow projection can instill confidence in lenders and investors, increasing the likelihood of obtaining financing or attracting investment.
19 videos|62 docs|12 tests
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