Answer to Question #80108 in Finance for Hugh Heron

Question

Explain the difference between a cash flow statement and a cash flow projection.

Answer 1

Cash Flow Forecast.
With a well prepared cash flow forecast it could be able to see which months you are likly to experience a cash surplus, and which months may result in a deficit.
Cash Flow Statement.
Just as planning for the future is critically important, you also need to review past performance. For that you’ll need a cash flow statement.
Different to cash flow forecast. Just as bank statement tells the state of finances over previous months, cash flow statement records the cash that has entered and exited business over the past month, quarter, or year.
By comparing opening and closing balance you’ll be able to see how much cash business is generating and how it’s moving in and out of business.