Cash flow projection
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A Cash Flow Projection is an attempt to forecast the cash flows that will be generated by an asset, often a company, over a specified time frame.
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[edit] Methodology
Projections can be made with varying levels of detail, but any cash flow projection for a business entails forecasting the income statement, balance sheet and cash flow statement. Crude projections can be created by simply plugging in what one considers a reasonable estimate for each line item, whereas more complex projections will have a number of drivers for each - for example, the projected revenues can be driven by separate volume and price development forecasts.
[edit] Uses
A cash flow projection is an important input into valuation of assets, budgeting and determining appropriate capital structures in LBOs and leveraged recapitalizations.
