University Of South Asia

Assignment

Program: BBA

Course: Entrepreneurship

Submitted By: Mohammad Tayyab

Roll No: B-22182

Submitted To: Sir, Ayyaz Farukh

Q) Please provide the importance of cash flows and financial assessment in
writing a business plan.
Answer; Completing a financial plan is the last step in writing a business plan.
The plan includes a projected profit-and-loss statement for the next three to
five years and a cash flow statement. The financial plan is important, because it
establishes the financial goals of the company. The purpose of the cash flow
statement is to show where an entities cash is being generated (cash inflows),
and where its cash is being spent (cash outflows), over a specific period of time
(usually quarterly and annually). It is important for analyzing the liquidity and
long term solvency of a company.
The primary objective of the cash flow statement is to help management in
making a decision and making a plan by providing current information on cash
inflow and outflow of any accounting period. Typically, financial analysis is
used to analyze whether an entity is stable, solvent, liquid, or profitable enough
to warrant a monetary investment. Many business owners and company
managers have found that insight gained from their examination of company
financial statements can be invaluable. Such insight can help businesses
improve their profitability, cash flow, and value.