After you complete the fourteen (14) Financial Budgets (STEP 1), the next step is to create your First Year "Forecasted Cash Flow Statement".

Recall from previous discussions, the Cash Flow Statement is a tool used to show the movement of cash INTO and OUT OF a business. In a nutshell, the purpose of a Cash Flow Statement is to plan and control a businesses' expected cash inflows and cash outflows in order to avoid unnecessary idle cash and unnecessary cash deficiencies.

BE SURE TO DEVELOP THE FORECASTED FINANCIAL STATEMENTS ONE YEAR AT A TIME. In other words, complete your First year Forecasted Cash Flow, Income Statement, Balance Sheet, Break-even Analysis, Ratio Analysis, and Sensitivity Analysis, BEFORE YOU BEGIN developing your Second year Forecasted Cash Flow, Income Statement, Balance Sheet, Break-even Analysis, Ratio Analysis, and Sensitivity Analysis.