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FINANCIALFINANCIALPLANNINGPLANNING
Prof. Francis Esponilla IIProf. Francis Esponilla II
 
 
TOPIC OUTLINETOPIC OUTLINE
•Deviations from Expected CashDeviations from Expected CashFlowsFlows•Pro Forma Income StatementPro Forma Income Statement•Pro Forma Balance SheetPro Forma Balance Sheet
 
 
Deviations from ExpectedDeviations from ExpectedCash FlowsCash Flows
•Cash budget represents merely an estimateCash budget represents merely an estimateof future cash flows.of future cash flows.•Actual cash flows will deviate more or lessActual cash flows will deviate more or lesswidely from those that were expectedwidely from those that were expecteddepending on the care devoted todepending on the care devoted topreparing the budget.preparing the budget.• The financial manager should take into The financial manager should take intoaccount possible deviations from theaccount possible deviations from theexpected outcome.expected outcome.•An analysis of the range of possibleAn analysis of the range of possibleoutcomes enables management to betteroutcomes enables management to betterasses the efficiency and flexibility of theasses the efficiency and flexibility of thefirm and to determine the aroriatefirm and to determine the aroriate
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