The key input to the short-run financial planning process is
A) the sales forecast.
B) the pro forma income statement.
C) the cash budget.
D) the cash forecast.

Question

Quizplus · Accepted Answer

The sales forecast is the key input to the short-run financial planning process as it helps predict the level of cash inflows from sales. Without an accurate sales forecast, it is difficult to create a reliable cash budget or pro forma income statement. While the cash budget and cash forecast are important components of short-run financial planning, they are both outputs that rely on the accuracy of the sales forecast as an input.

The Key Input to the Short-Run Financial Planning Process Is