Which adjustment relates to the cash flow forecast in light of asset acquisitions or divestitures?

The adjustment that relates to the cash flow forecast in the context of asset acquisitions or divestitures is the change to cash flow for that specific year. When a company acquires or divests assets, these transactions directly impact the cash flows generated by the business. For instance, acquiring an asset typically involves a cash outflow at the time of purchase, which must be reflected in the cash flow forecast. Conversely, if a company sells an asset, it would generate a cash inflow which would also need to be included in the cash flow projections.

This adjustment is crucial because it ensures that the financial model accurately reflects the immediate effects of these transactions, enabling stakeholders to assess the value and performance of the company post-acquisition or divestiture. Managing these cash flow changes properly will provide a clearer picture of the ongoing operational cash flows and the company's overall financial health.

Focusing on cash flow provides a grounded basis for understanding the impact of strategic decisions on a company's liquidity and financial viability over time.