CASE STUDY 3 Cash Budget Template SCHEDULE OF EXPECTED CASH COLLECTIONS FROM CUSTOMERS Credit Sales April May June Total Cash Collections SCHEDULE FOR EXPECTED PAYMENTS FOR PURCHASE OF INVENTORY Inventory purchases April May June Total Payments for Inventory Purchases LBJ Company Cash Budget For the Two Months of May and June Cash balance Add Receipts Collections from customers Sale of plant assets Sale of new common stock Cash sales Total receipts Total Available Cash Less Disbursements Purchases of inventory Operating expenses Selling and administrative expenses Equipment purchase Dividends Total disbursements Excess deficiency of available cash over disbursements Financing Borrowings Repayments Ending cash balance May 65 800 26 850 92 650 May 117 000 54 000 171 000 May 20 000 92 650 33 000 0 75 000 200 650 220 650 171 000 15 000 10 150 35 000 0 231 150 10 500 0 10 500 Please answer the 3 qualitative questions on the next tab called Qualitative Questions June 62 650 22 500 85 150 June 81 000 25 200 106 200 June 10 500 85 150 0 50 000 57 000 192 150 181 650 106 200 15 000 10 150 0 20 000 151 350 30 300 0 30 300 1 2 3 What are the three sections of a Cash Budget and what is included in each section There are three sections of a cash budget 1 Receipts Section 2 Disbursement Section and 3 Financing Section The receipts section is for the collections made from the sales and any type of activity that generates fund The Disbursement Section is for the disbursements made for example payments made to suppliers purchase of any equipment payments made for any expenses incurred and etc The Financing Section contains any type of financing being made when there is shortage of funds and the same is borrowed or being loaned from the bank for the cash balance to be sufficient Why is a Cash Budget so vital to a company Cash budget is vital to the company because cash is the life blood of the business If a company cannot estimate the cash position by itself then in future the cash position might affect the workings of the firm due to which the firm may have to resort to financing and this financing might lead the firm into further issues Hence the cash budget is important tool for the manangement in order to figure out the actual position of the firm in the upcoming days What are the five basic principles of cash management that a company can follow in order to improve its chances of having adequate cash The five basic principles of cash management that a company can follow in order to improve its chances of having adequate cash are as follows 1 Revenue or expense budget 2 Collecion of receivables 3 Importance of No 4 Negotiate Expenses 5 Cash flow dashboard
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