Cash Budgets
Aim:
time
To show how a firm can anticipate the flow of cash in and out over a period of
These are very like the Household Budget Tables and Cash Flow Statements done in
Junior Cert. They show the flow of cash in and out of a business. You have to work
out Net Cash Inflow/Outflow, as well as the Opening and Closing Cash Balances.
Basic Structure is
Jan
Feb
Mar
Apr
May
June
Inflows
Outflows
Net Inflow/Outflow
Opening Balance
Closing Balance
Things which may trip you up:
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Non cash items like depreciation are not to be included
Sales on one month are not necessarily paid for in that month
Bad Debts mean less cash coming in
Purchases may be paid for over a number of months
You may keep closing stocks which mean more goods being bought so
working out purchases can be tricky eg you should buy 20% of next months
sales requirement
Money may have to be borrowed to ensure a minimum cash balance is held