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Cash Budget

Cash Budget (example). Beginning cash balance$30,000Cash receipts913,700Cash available943,700Cash disbursements (including minimum balance)1,140,880Excess (deficiency)(197,180)Financing: Borrow (repay) 198,000Ending cash balance $35,820. . . Elements of planning an

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Cash Budget

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    1. Cash Budget Cash budget is a schedule of expected cash flows (receipts and disbursements); predicts the effects on cash position at the given level of operations; plans for the borrowing and repayment of loans

    2. Cash Budget (example) Beginning cash balance $30,000 Cash receipts 913,700 Cash available 943,700 Cash disbursements (including minimum balance) 1,140,880 Excess (deficiency) (197,180) Financing: Borrow (repay) 198,000 Ending cash balance $35,820

    3. Elements of planning and control related to cash management: Sales and credit policies: transport, sales discounts payments conditions (eg. in 7 days, 15 days, 30 days, ...) Purchases and payment policies : purchases discounts , payment conditions (immediate or terms ) taking of deductions at source, sales taxes , insurance, etc. Control: comparison of forecast vs.... actual taking the necessary actions to balance sources and uses of funds

    4. Receipts of funds Resulting from normal activities Resulting from the placement of funds Resulting from other sources (new influx of capital, long term borrowings , sales of assets, gifts, insurance indemnities , etc.) Disbursements of funds Resulting from normal business activities Resulting from short and long term borrowings Resulting from other activities (eg. acquisition of buildings, projects, etc. )

    5. Controlling accounts receivable AR rotation = AR turnover Days in recovering = average collection periodAR rotation = AR turnover Days in recovering = average collection period

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