Thesis: Forecasting Cash Flow Needs of a Company

Sample Thesis Paper

The eighth question of the dissertation was developed to research how managers in the finance department prepare cash budgets and forecast the cash requirements in an organisation. The responses to this question help evaluate the researcher how finance managers predict the cash inflows and outflows in a company. The finance managers in Marks and Spencer indicated that the cash flows of the company are forecasted individually on a three-year basis according to past performance and future expectations. The cash flows beyond the three year period are forecasted using a 2 percent growth rate.  The managers at Debenhams in response to this question generally stated that a comprehensive operating plan is prepared in August each year and forecasts are revised on a monthly basis.

The operating plan consists of key performance indicators and the actual performance is compared with forecasted performance and any variances are reported. Cash flow forecasting is a part of this overall forecast in Debenhams and the cash forecast is not prepared individually and according to the managers this forecast serves the purpose of their requirement and an individual forecast is not needed for cash flow management. If the responses to this question are compared for both companies, it can clearly be seen that both companies use the historical performance as a gauge for present and future performance and for forecasting future cash flow requirements.

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