Cash Flow Projections Lecture Notes

These flashcards cover key concepts related to cash flow projections, including definitions, analytical methods, and important financial statements associated with forecasting and financial management.

Cash Flow Projection

A quantitative assessment of a company's future financial performance and financing needs, forecasting its ability to repay loans from internally generated cash.

Financial Projections

Estimates of a company's future financial outcomes, providing a basis for decision-making and strategic planning.

Sensitivity Analysis

A method used to evaluate how the different values of an independent variable affect a particular dependent variable, by re-evaluating the initial assumptions.

Cash Flow Drivers

Key factors that affect a company's cash flow, including sales growth percentage, operating expenses, accounts receivable days, and inventory days.

Projection Accomplishments

The outcomes of financial projections that can include a range of possible scenarios and fluctuations in critical variables.

Forecast Variables

Specific metrics used in financial projections, such as sales growth percentage and gross profit margin.

Defensible Assumptions

Assumptions in financial projections that are supported by historical data and logically derived analyses.

What if method

A technique to assess the cash effects of changes in a company's fundamentals and other influencing factors.

Income Statement

A financial statement that shows a company's revenues and expenses during a specific period, culminating in net profit or loss.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.