The assessment of cash flow forecasting

Abstract

Purpose

The aim of this study is to show in detail the theoretical and practical foundations of a new feasibility technique for cash flow forecasting (CFF) based on triangular fuzzy numbers.

Design/methodology/approach

One of the most complicated problems business people face is determining if they have enough cash to be able to meet all future payments of a specific period. The uncertainty of forecasting the data to solve the problem suggests that a model based on fuzzy logic tools may provide a good way to obtain new techniques to ensure the feasibility of cash flow management.

Findings

This study shows how a specific company can obtain a quantitative idea of the risk of not being able to meet payments in a specific period. This idea can be put into practice with the usual computer tools.

Research limitations/implications

This work presents a technique to predict the feasibility of CFF using triangular fuzzy numbers. There are other fuzzy numbers with which we can model the study problem and that offer certain advantages over to triangular ones.

Practical implications

A qualitative procedure is currently used to calculate the feasibility of a CFF. This work represents a step forward since it shows how to model quantitative feasibility.

Originality/value

The originality and value of this contribution consists of providing a complete model for a feasibility technique of CFF, as well as several proposals to mechanize the calculations and make the results more intuitive by means of spreadsheet graphs.

Citation

Linares‐Mustarós, S., Carles Ferrer‐Comalat, J. and Cassú‐Serra, E. (2013), "The assessment of cash flow forecasting", Kybernetes, Vol. 42 No. 5, pp. 720-735. https://doi.org/10.1108/K-03-2013-0060