Cash Flow Forecasting : Proposal for New Long-Term Cash Flow Forecast in the Case Company
Pitkänen, Annika (2016)
Pitkänen, Annika
Metropolia Ammattikorkeakoulu
2016
All rights reserved
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-201601291753
https://urn.fi/URN:NBN:fi:amk-201601291753
Tiivistelmä
The purpose of this study was to develop a cash flow forecast model for the case company. The case company in this thesis was a Finnish building construction company. The group controlling set a target to improve the corporate treasury’s current long-term cash flow forecast because it was inaccurate and it often had outstanding deficiencies between actual and forecasted figures. A project team was set up to investigate on this issue and this research and development project is documented in this thesis. The outcome of this research was a cash flow forecast proposal that included most the necessary attributes in order to implement the report of future cash flows.
This study was conducted as an action research. The theoretical framework of this study focused on cash flows in general and cash flow forecasting tools. Both qualitative and quantitative research methodology was used in this study. The qualitative data was collected in workshop meetings with the company’s key personnel concerning the cash flow forecasting and technical implementation. The quantitative research took place when analysing the company’s current cash flow forecast and different forecasting alternatives.
The results of the study showed that the case company’s current cash flow forecast model was not sufficient and, instead of improving the current forecast model, the project team formed a proposal for a new, long-term cash flow forecast. The project team ended up supporting a direct method of cash flow forecasting and defined most of the necessary attributes around this model.
It is recommended that the case company will continue improving its cash flow forecasting accuracy and will consider implementing the proposed cash flow forecast. Successful cash flow forecasting helps to avoid unexpected deficits and in a long run it can improve the company’s financial performance.
This study was conducted as an action research. The theoretical framework of this study focused on cash flows in general and cash flow forecasting tools. Both qualitative and quantitative research methodology was used in this study. The qualitative data was collected in workshop meetings with the company’s key personnel concerning the cash flow forecasting and technical implementation. The quantitative research took place when analysing the company’s current cash flow forecast and different forecasting alternatives.
The results of the study showed that the case company’s current cash flow forecast model was not sufficient and, instead of improving the current forecast model, the project team formed a proposal for a new, long-term cash flow forecast. The project team ended up supporting a direct method of cash flow forecasting and defined most of the necessary attributes around this model.
It is recommended that the case company will continue improving its cash flow forecasting accuracy and will consider implementing the proposed cash flow forecast. Successful cash flow forecasting helps to avoid unexpected deficits and in a long run it can improve the company’s financial performance.