Indirect Cash Forecasting
The most typically accustomed form for cash flow forecasting is the indirect method. It is employed for long-term forecasts, which range from 1–5 years.
It is conventionally utilized for longer-term planning goals. It utilizes the pro forma balance sheet and profit and loss reports to forecast cash flows, including investments and financing. Ending cash balances are computed based on adding back non-cash expenses to net income and integrating projected transformations in balance sheet entities.