The Application Of Cash Flow In Financial Forecasting And Decision

In our country, any routine activities of business enterprises begin with the cash and end in it. The normal operating cycle of a business involves purchasing inventory-using cash, which is then sold, often on account receivable. Once the receivable is collect, the cycle begins again. So cash is the "blood vessels" for the survival and development of business enterprises. Now more and more people put emphasis on the liquidity of capital. A smoothly cash flow will directly exert a significant influence on corporations' development. Therefore any block in the links will bring serious economic results. Financial forecasting and financial decision are the main parts in business activities of enterprises and whether they are right or not play an important role in the rise and fall as well as the survival and adversity of enterprises.This paper studies the application mode of cash flow in corporations' financial forecasting and decision, builds up model of cash flow forecasting and puts forward making use of exponential smoothly method to forecast enterprises' future cash flow, proposes working out cash flow statement to forecast and analyze enterprises' future financial situation. Based on the choice of analysis about cash inflow, financing processes and methods, the paper gives the concept of cash outflow rate and points out cash outflow rate is a significant basis in financial methods decision. The thesis not only builds up the general and concrete model of the cash outflow rate in financing process by making use of finance management and cost management theories, but also raises the countermeasures and suggestions on application of cash flow in financial forecasting and decision.