What is the primary tool for short-term financial forecasting?

Question

Quizplus · Accepted Answer

Pro forma cash budget is the primary tool for short-term financial forecasting as it provides a detailed plan of cash inflows and outflows for a specified period, typically one year or less. It allows businesses to anticipate cash shortages or surpluses and take informed decisions to optimize cash management. Pro forma income statement and balance sheet are critical components of long-term financial planning, while capital budgeting is a tool for evaluating long-term investment projects.

What Is the Primary Tool for Short-Term Financial Forecasting