Cash Flow Forecaster
Project your future cash flows by estimating income and expenses over time.
About Cash Flow Forecasting
Cash flow forecasting is a financial planning tool that helps individuals and businesses predict future cash inflows and outflows. It's essential for maintaining financial health and avoiding cash shortages.
How Cash Flow Forecasting Works
The basic principle of cash flow forecasting is to track:
Ending Balance = Beginning Balance + Income - Expenses
Where:
- Beginning Balance is the starting cash amount
- Income represents all cash inflows during the period
- Expenses represents all cash outflows during the period
- Ending Balance becomes the Beginning Balance for the next period
Applications of Cash Flow Forecasting
- Personal Finance - Plan for major purchases or savings goals
- Business Planning - Ensure sufficient cash for operations and growth
- Investment Analysis - Evaluate the viability of projects or investments
- Loan Applications - Demonstrate ability to repay debts
- Budgeting - Align spending with income over time
Growth Rate Considerations
The growth rate allows you to model increasing or decreasing income and expenses over time. A positive growth rate means your income/expenses will increase each period, while a negative rate models decreases.
Example
If you start with $5,000 and have:
- $2,000 monthly income
- $1,500 monthly expenses
- 2% monthly growth rate
After 12 months:
- Your final balance would be $11,543.23
- Total income would be $26,824.33
- Total expenses would be $20,281.10
Without growth, the final balance would be $11,000.