What type of flow does a cashflow forecast primarily predict?

A cash flow forecast primarily predicts the overall cash flow of a business over a specific period. This includes both cash inflows, such as sales revenue and investments, and cash outflows, including expenses and payments. The primary purpose of a cash flow forecast is to provide a comprehensive view of the expected cash movement within the business, allowing management to plan for liquidity needs and financial obligations effectively. By examining the total cash flow, businesses can identify patterns, anticipate potential shortfalls, and make informed decisions to ensure they have sufficient cash on hand to meet their operational needs.

While inflow and outflow are essential components of cash flow, focusing solely on one aspect would not provide the holistic view that a cash flow forecast aims to achieve. Thus, understanding cash flow in its entirety is crucial for effective financial management.