Business FinancesQuestion 1135 of 1605
A cash flow projection primarily helps a contractor:
a.Anticipate when cash shortfalls will occur so financing can be arranged in advance
b.Calculate depreciation
c.Avoid paying income tax
d.Determine his CSLB classification
Explanation
A cash flow projection maps expected receipts and disbursements over time so the contractor can foresee shortfalls and arrange a line of credit or adjust billing before running out of money. It is a timing tool, not a tax or licensing tool.
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Sen Lin, PrepPass Founder · Verified against California CSLB Contractor License Law & Business Exam · How we review
Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)