Forces you to think through your future plans for the year

Tests your plans, such as whether you will produce enough income to meet all your cash needs

Projects how much operating credit you will need and when for your projects as well as when you will be in a position to repay your loans

Provides a guide against which you can compare your actual cash flows

Helps you communicate your plans and credit needs to your lender

Helps you identify present value of your investment

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