The accuracy of a cash flow forecast is inversely related to the forecast horizon.

Name: The accuracy of a cash flow forecast is inversely related to the forecast horizon.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

As the forecast horizon (length of time over which the forecast is made) increases, the uncertainty and variability of factors like market conditions and customer behavior increase, making it more difficult to accurately predict cash flows. Therefore, the further out a cash flow forecast goes, the less accurate it will be.

The Accuracy of a Cash Flow Forecast Is Inversely Related