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You can simply drag and drop slides from the appendix into the main presentation to make for a richer lecture experience. Get started now at: http://boundless.com/teaching-platform Free to edit, share, and copy Feel free to edit, share, and make as many copies of the Boundless presentations as you like. We encourage you to take these presentations and make them your own. If you have any questions or problems please email: educators@boundless.com Free to share, print, make copies and changes. Get yours at www.boundless.com About Boundless Boundless is an innovative technology company making education more affordable and accessible for students everywhere. The company creates the world’s best open educational content in 20+ subjects that align to more than 1,000 popular college textbooks. Boundless integrates learning technology into all its premium books to help students study more efficiently at a fraction of the cost of traditional textbooks. The company also empowers educators to engage their students more effectively through customizable books and intuitive teaching tools as part of the Boundless Teaching Platform. More than 2 million learners access Boundless free and premium content each month across the company’s wide distribution platforms, including its website, iOS apps, Kindle books, and iBooks. To get started learning or teaching with Boundless, visit boundless.com. Free to share, print, make copies and changes. Get yours at www.boundless.com Forecasting Financial Statements > Building a Cash Budget Building a Cash Budget • Receipts • Payments • The Forecast Budget Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/finance?campaign_content=book_192_section_52&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=dir ect&utm_source=boundless Forecasting Financial Statements > Building a Cash Budget Receipts • Cash receipts come from internal sources, such as cash from sales and accounts receivable, and external sources, such as bank loans or accounts receivable financing. • A company needs to understand the timing involved with cash-producing or cashdepleting activities before it can properly plan for cash flows. • The receipt cycle is the total time between when products or services are delivered and when payment from the customer clears the bank. • The overall objective for a company should be to decrease the receipt cycle. Flow Chart of Cash Flows View on Boundless.com Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/finance/textbooks/boundless-finance-textbook/forecasting-financial-statements-4/building-a-cash-budget-52/receipts-2473818?campaign_content=book_192_section_52&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=direct&utm_source=boundl Forecasting Financial Statements > Building a Cash Budget Payments • Cash payments must be made for relevant expenses, which include those to suppliers for inventory or other supplies, employees for wages, government for taxes, and lenders for interest on borrowed money. • A company's objective in regards to the cash dispersement cycle should be to increase the cycle time, or delay making payments until they are due. • Typical cash outflows from investing activities include purchase of capital assets, purchase of bonds/notes or shares of other entities, and loans to other entities. • Typical cash outflows from financing activities include payments of dividends to the company's own shareholders, redemption (repurchase) of company's own Sample Paystub shares, and repayment of principal and interest on company's own bonds or View on Boundless.com notes. Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/finance/textbooks/boundless-finance-textbook/forecasting-financial-statements-4/building-a-cash-budget-52/payments-2481909?campaign_content=book_192_section_52&campaign_term=Finance&utm_campaign=powerpoint&utm_medium=direct&utm_source=boundl Forecasting Financial Statements > Building a Cash Budget The Forecast Budget • Cash is the most liquid of assets, and it represents the lifeblood for growth and investment. • If a business runs out of cash and is not able to obtain new financing, it will become insolvent. • In order to generate cash, a company manages activities. such as billing customers as quickly as possible, disbursing payments only when they come due, collecting cash on overdue accounts, and investing idle cash. • What a cash flow forecast does is estimate cash inputs and outputs over a period of time, usually at least 90 days, in order to give you assurance that your business Forecast Example will have the cash necessary to meet its obligations to others. View on Boundless.com Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/finance/textbooks/boundless-finance-textbook/forecasting-financial-statements-4/building-a-cash-budget-52/the-forecastbudget-249- Appendix Free to share, print, make copies and changes. Get yours at www.boundless.com Forecasting Financial Statements Key terms • disbursement Money paid out or spent. • insolvent Unable to pay one's bills as they fall due. • lien A legal claim; a charge upon real or personal property for the satisfaction of some debt or duty. Free to share, print, make copies and changes. Get yours at www.boundless.com Forecasting Financial Statements Flow Chart of Cash Flows This figure charts the flow of cash in and out of a business. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikispaces. "IB2-Business-p7 - 3.3 Working Capital." CC BY-SA http://ib2-business-p7.wikispaces.com/3.3+Working+Capital View on Boundless.com Forecasting Financial Statements Sample Paystub This is an example of a paystub to an employee, one of the most significant cash disbursements necessary for a company. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikipedia. "Payroll." GNU FDL http://en.wikipedia.org/wiki/Payroll View on Boundless.com Forecasting Financial Statements Forecast Example This is an example of a cash flow forecast. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikispaces. "IB2-Business-p7 - 3.3 Working Capital." CC BY-SA http://ib2-business-p7.wikispaces.com/3.3+Working+Capital View on Boundless.com Forecasting Financial Statements A company sells produce to small farmer markets and has receivables of $30,000. It believes that it may face a series of short-term cash deficiencies in the near future. Which of the following is an option the company can pursue? A) Borrow against its receivables from a financing company. B) Borrow against its inventory from a financing company. C) All of these answers. D) Obtain a line of credit with its bank. Free to share, print, make copies and changes. Get yours at www.boundless.com Forecasting Financial Statements A company sells produce to small farmer markets and has receivables of $30,000. It believes that it may face a series of short-term cash deficiencies in the near future. Which of the following is an option the company can pursue? A) Borrow against its receivables from a financing company. B) Borrow against its inventory from a financing company. C) All of these answers. D) Obtain a line of credit with its bank. Free to share, print, make copies and changes. Get yours at www.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/ Forecasting Financial Statements A company wants to increase the amount of time in its disbursement cycle. Which of the following is a valid way to do that? A) Use credit cards as often as possible. B) All of these answers. C) Mail payment to suppliers for contractual obligations. D) Pay for purchases using checks. Free to share, print, make copies and changes. Get yours at www.boundless.com Forecasting Financial Statements A company wants to increase the amount of time in its disbursement cycle. Which of the following is a valid way to do that? A) Use credit cards as often as possible. B) All of these answers. C) Mail payment to suppliers for contractual obligations. D) Pay for purchases using checks. Free to share, print, make copies and changes. Get yours at www.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/ Forecasting Financial Statements A company wants to forecast its cash flows for the next 30 days. Which method should it use? A) Adjusted Net Income Method. B) Pro-forma balance sheet method. C) Accrual reversal method. D) Direct Method. Free to share, print, make copies and changes. Get yours at www.boundless.com Forecasting Financial Statements A company wants to forecast its cash flows for the next 30 days. Which method should it use? A) Adjusted Net Income Method. B) Pro-forma balance sheet method. C) Accrual reversal method. D) Direct Method. Free to share, print, make copies and changes. Get yours at www.boundless.com Boundless - LO. "Boundless." CC BY-SA 3.0 http://www.boundless.com/ Forecasting Financial Statements Attribution • Wikibooks. "Sustainable Business/Finance." CC BY-SA 3.0 http://en.wikibooks.org/wiki/Sustainable_Business/Finance#Cashflow_budget • Wikipedia. "Cash flow forecasting." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Cash_flow_forecasting • Wikispaces. "goldkindgrade12accounting - Chapter 18 Notes - Cash Flow Statements." CC BY-SA http://goldkindgrade12accounting.wikispaces.com/Chapter+18+Notes+-+Cash+Flow+Statements • Wiktionary. "disbursement." CC BY-SA 3.0 http://en.wiktionary.org/wiki/disbursement • OER Commons. License: Other http://www.oercommons.org/courses/managing-cash-flow/view • Wikipedia. "Cash flow forecasting." CC BY-SA 3.0 http://en.wikipedia.org/wiki/Cash_flow_forecasting • Connexions. "Financing Your Organization - Advanced reports and analyses." CC BY 3.0 http://cnx.org/content/m35491/latest/ • Wiktionary. "insolvent." CC BY-SA 3.0 http://en.wiktionary.org/wiki/insolvent • Wikibooks. "Sustainable Business/Finance." CC BY-SA 3.0 http://en.wikibooks.org/wiki/Sustainable_Business/Finance#Cashflow_budget • Wikispaces. "IB2-Business-p7 - 3.3 Working Capital." CC BY-SA http://ib2-business-p7.wikispaces.com/3.3+Working+Capital • Wiktionary. "lien." CC BY-SA 3.0 http://en.wiktionary.org/wiki/lien • OER Commons. 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