Key inputs to short-term financial planning are
A) leverage analysis.
B) operating budgets.
C) economic forecasts.
D) sales forecasts, and operating and financial data.

Question

Quizplus · Accepted Answer

Short-term financial planning involves forecasting and managing cash flows and liquidity over the next year or less. To do this effectively, short-term financial planners require a detailed understanding of expected sales, operating costs, and financial data. This information will be used to develop operating budgets and cash flow forecasts that will help the organization manage its working capital (current assets minus current liabilities) and ensure it can meet its short-term obligations. Economic forecasts may also provide valuable information, but they are not as critical to the day-to-day management of cash flows as sales and operational data. Leverage analysis is a tool for evaluating the organization's capital structure, which is more relevant to long-term financial planning than short-term financial planning. Therefore, the best choice is D, sales forecasts, and operating and financial data.

Key Inputs to Short-Term Financial Planning Are