Thursday, October 29, 2009

Why is a cash flow statement prepared for forecasted results and not on actuals like sources and app

What is the difference between sources and application of funds statements and cash flows statements. Why can%26#039;t a cash flow statement be prepared for the actuals and not on the forecasted results



Why is a cash flow statement prepared for forecasted results and not on actuals like sources and applications?consolidation loans





It depends on whether it is an actual cash flow statement or a forecasted cash flow statement. If you are trying to estimate the net present value of a company by calculating future cash flows, of course you will use forecasted future figures of sales etc. depending on how you estimate growth is going to be like. However, forecasted figures are also based on actual figures e.g. future sales are forecasted based not only on economic predictions but the past growth patterns.

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