What is the term for the financial document that shows the predicted future cash inflows and outflows for a business over a trading period?

• A. Cash flow forecast
• B. Cash flow statement
• C. Closing balance
• D. Liquidity

Answer: (A)

A cash flow forecast is a projection of future cash inflows and outflows over a set trading period. It’s used to plan liquidity, time when cash will be needed, and to identify potential shortfalls so the business can arrange financing or adjust spending. The cash flow statement, in contrast, records actual cash movements that have occurred in the past. The closing balance is simply the cash on hand at the end of a period, not a forward-looking document. Liquidity is a measure of a firm’s ability to meet short-term obligations, not a document.