How To Do A Cash Flow Projection

What is how to do a cash flow projection?

A cash flow projection is a financial tool used to forecast the amount of cash coming in and going out of a business over a specific period. It allows you to understand how much money is needed to cover expenses, make investments, and plan for the future.

What are the types of how to do a cash flow projection?

There are two main types of cash flow projections: direct and indirect. Direct cash flow projections involve listing specific cash inflows and outflows, while indirect cash flow projections start with the net income and adjust for non-cash items and changes in working capital.

Direct Cash Flow Projection
Indirect Cash Flow Projection

How to complete how to do a cash flow projection

To complete a cash flow projection successfully, follow these steps:

01
Determine your starting cash balance
02
List all expected cash inflows
03
List all expected cash outflows
04
Calculate the net cash flow for each period
05
Adjust for any non-cash items
06
Factor in changes in working capital
07
Review and analyze the projection regularly to make informed decisions

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