What defines the liquidity planning process in financial management?

Liquidity planning is a critical aspect of financial management, as it ensures that a company has the necessary cash flow to meet its short-term obligations. The correct choice emphasizes the use of both forecasted values and past actuals in the liquidity planning process.

By utilizing forecasted values, financial managers can anticipate future cash flows and potential liquidity needs based on expected revenue, expenses, and other operational factors. This forward-looking approach helps in proactive decision-making to secure adequate liquidity. At the same time, integrating past actuals allows managers to ground their forecasts in historical performance, providing a more reliable basis for predictions. The historical data can highlight seasonal trends and fluctuations in cash flow that may recur, thus enhancing the accuracy of future estimates.

Combining these two elements enables organizations to create a more comprehensive and realistic liquidity planning process, ensuring that they can effectively manage their financial resources and mitigate the risk of cash shortages. This holistic approach contrasts with the other options, which either limit the scope of analysis or exclude important data that could influence liquidity decisions.