What is the primary tool for short-term financial forecasting?

Question

Quizplus · Accepted Answer

The primary tool for short-term financial forecasting is the pro forma cash budget, which outlines the expected inflows and outflows of cash for a specific period (usually one year or less). It takes into account expected sales, expenses, and other factors that impact the company's cash flow, providing management with a clear picture of the company's liquidity position. The pro forma income statement and pro forma balance sheet are useful, but they focus more on projected profits and assets/liabilities, respectively, rather than cash flow. Capital budgeting refers more to long-term investment decisions than short-term forecasting.

What Is the Primary Tool for Short-Term Financial Forecasting