Cash flow projections describe?

Cash flow projections describe?

• A. Profits only
• B. Expenses only
• C. Cash inflows and outflows
• D. Asset depreciation

Answer: (C)

Cash flow projections track the actual cash moving in and out of a business over a future period. They focus on timing and amounts of cash receipts (like sales payments and loans) and cash payments (like supplier payments and wages). This helps gauge liquidity—whether the business will have enough cash to meet obligations as they arise. It’s different from profit, which is an accrual-based measure that can include non-cash items; it’s also not just expenses, since expenses are only part of the outflow picture and may not reflect actual cash payments in a period. It isn’t depreciation, which is a non-cash accounting allocation. So the description that best matches cash flow projections is cash inflows and outflows.

Cash flow projections track the actual cash moving in and out of a business over a future period. They focus on timing and amounts of cash receipts (like sales payments and loans) and cash payments (like supplier payments and wages). This helps gauge liquidity—whether the business will have enough cash to meet obligations as they arise. It’s different from profit, which is an accrual-based measure that can include non-cash items; it’s also not just expenses, since expenses are only part of the outflow picture and may not reflect actual cash payments in a period. It isn’t depreciation, which is a non-cash accounting allocation. So the description that best matches cash flow projections is cash inflows and outflows.