CREATING YOUR FORECASTED CASH FLOW STATEMENTS

After you complete the fourteen (14) Financial Budgets (STEP 1), the next step in the forecasting process is to create your First Year "Forecasted Cash Flow Statement".

Recall from previous discussions, the Cash Flow Statement is a tool used to show the movement of cash INTO and OUT OF a business. In a nutshell, the purpose of a Cash Flow Statement is to plan and control a businesses' expected cash inflows and cash outflows in order to avoid unnecessary idle cash and unnecessary cash deficiencies.  Finally, and probably the most important purpose of the Cash Flow Statement, is to determine how much financing you will need to start your business or expand your existing one.

Continuing on with our complete example of the forecasting process, here are the forecasted cashflow statements in which Murray Wilson would develop for Scholarship Information Services.  

Murray's 200X Forecasted Cash Flow Statement

Murray's 200Y Forecasted Cash Flow Statement

BE SURE TO DEVELOP THE FORECASTED FINANCIAL STATEMENTS ONE YEAR AT A TIME. In other words, complete your First year Forecasted Cash Flow, Income Statement, Balance Sheet, Break-even Analysis, Ratio Analysis, and Sensitivity Analysis, BEFORE YOU BEGIN developing your Second year Forecasted Cash Flow, Income Statement, Balance Sheet, Break-even Analysis, Ratio Analysis, and Sensitivity Analysis.