Short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value

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Cash flow projections estimate the amount of cash expected to flow into and out of a business over a specific period. They help businesses anticipate cash shortages or surpluses, guiding financial planning and decision-making. Positive cash flow projections indicate healthy finances, while negative projections can signal potential liquidity issues.

Example: A software company forecasts £200,000 in customer payments and £150,000 in expenses for the upcoming quarter, leaving a positivecash flow of £50,000. The projections highlight that the company has sufficient cash to cover its operating costs, invest in product development, and repay aportion of its outstanding loan.