1. Two key aspects of financial planning are cash planning and profit planning. Cash planning involves the preparation of the cash budget and profit planning involves preparation of pro forma statements. To make cash budget and pro forma statements for a firm, accounting knowledge is needed. Do accounting courses you took before help you better understand how to make cash budget and pro forma income statement and balance sheet? Explain.

2. "Cash is king" is an old saying in finance. A firm's cash flow is different from its profit. Why does finance care more about the cash flow than the profit? If a firm has the positive earnings but has the negative free cash flow, what does this signal indicate?