Cash flow page 224
1 ▶ Describe what a ‘cash flow forecast’ shows.
A cash flow forecast is a financial document, usually produced
on a spreadsheet, which shows the likely receipts and
payments of a business for a future time period. All expected
payments and receipts are listed month by month and the
expected cash balance is calculated at the end of each month.
3 ▶ Comment on the cash position of the business during the
nine-month period.
The expected cash position for Linari Garden Design looks quite
promising. In the first month of trading, when all the setting up
costs are incurred, the business is still expected to have a
positive cash balance at the end of the month. After that, the
cash position improves every month up until September when
it is expected to be €4900. In the next few months, the cash
position worsens because revenue starts to decline. But even in
December, when there is no revenue, the closing cash position
is still positive.