Chapter 3 Cash Budget

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Chapter 3Cash Budget
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Cash Budget

• A listing of the firms anticipated cash inflows
  and outflows over a specified time
• Useful for planning short-term borrowing and the
  timing of expenditures

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Whats in the Cash Budget?

• Receipt of cash may come from
• Cash sales
• Payment of debtors (credit sales)
• Sale of fixed assets
• Issue of new shares or loan stock
• Receipt of interest and dividends from
  investments outside the business
• Payments of cash may be for
• Purchase of stock
• Payroll costs or other expenses
• Purchase of capital items
• Payment of interest, dividends and taxation

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Cash Budget

• Composed of three parts
• Worksheet area
• Listing of each of the cash inflows and outflows
• Calculation of the ending cash balance and
  borrowing needs

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Calculating Ending Cash Balance

• Beginning Cash Balance
• Total Collections
• - Total Disbursements
• ------------------------------------
• Unadjusted Cash Balance
• Current Borrowing
• ------------------------------------
• Ending Cash Balance

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More Excel Functions

• Maximum
• MAX(NUMBER1,NUMBER2,.)
• Minimum
• MIN(NUMBER1,NUMBER2,.)