Question

An aspect of short-term financial planning is forecasting the operating cash flow and consequently the profitability...

An aspect of short-term financial planning is forecasting the operating cash flow and consequently the profitability of the company in the coming period. This type of financial planning typically uses forecasted ________.

Select one:

a. Working capital statements

b. Capital budgeting

c. Income statements

d. Statement of retained earnings

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Homework Answers

Answer #1

Answer: c. income statements

Explanation:

a. Working capital statements:

It measures company's liquidity by subtracting current liabilities from current assets

b. Capital budgeting:

It helps in long-term investment decisions. Such as purchase of new equipment, replacement etc.

c. Income Statement:

An aspect of short-term financial planning is forecasting the operating cash flow and consequently the profitability of the company in the coming period.

d. Statement of retained earnings:

It represents accumulated net earnings net of any dividend payments.

Thus,

An aspect of short-term financial planning is forecasting the operating cash flow and consequently the profitability of the company in the coming period. This type of financial planning typically uses forecast is called 'income statement'.

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