Question

Explain the specific matters you would consider when reviewing the profit and cash flow forecasts the bank requires. (

Answer 1

Profit and Cash flow of the bank manifests the profitability and liquidity position of the bank through which we can estimate the financial position of the bank.

profit forecasts states whether the bank is going to earn a profit through the specific investments or business activities and if yes then how much profit will it generate through the same. therefore, in case of bank, while forecasting the profit of the bank one must review the loans rate and investment rate in order to check whether such loan amount will give profit at high rate or at low rate or will just neutral.

the matters which are required to be contemplated while reviewing the cash flow forecast are Gst rebates , insurance shemes of the bank cash generating through assets investments, banks investments etc.