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N5 Prelim Preparation

N5 Prelim Preparation. January 2014. Sources of Finance. Sources of Finance. Cash Budget. A financial statement which shows the amount of cash flowing in and out of a business over the course of a set time period. Cash Budget - example. Why Prepare a Cash Budget?.

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N5 Prelim Preparation

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  1. N5 Prelim Preparation January 2014

  2. Sources of Finance

  3. Sources of Finance

  4. Cash Budget • A financial statement which shows the amount of cash flowing in and out of a business over the course of a set time period.

  5. Cash Budget - example

  6. Why Prepare a Cash Budget? • Shows if the organisation has a surplus of cash: • Could invest the cash • Could plan large capital expenditure • Shows if the organisation has a deficit of cash: • Allows corrective action to be taken • Compare actual with forecast • Find ways to control expenditure • Delegate responsibility to individual managers/departments

  7. Solving Cash Flow Problems • There are many possible solutions depending on the actual problem, but may include: • Reduce stock levels • Encourage debtors to pay quickly • Reduce cash outflows (expenses) • Arrange a bank overdraft (short term)

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