Cash Flow Budget: Analysis and Recommendations

PROJECT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
a) Cash budget of the company for the month of October, November and December 2018.......1
b) Analysing the cash flow budget and identifying the issues faced regarding the budget and
making recommendations for overcoming the issues..................................................................2
CONCLUSION ...............................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Cash flow budget is detailed information about the inflows and outflows of cash during
the specified budgeted period like months, quarter or for years. Primary purpose of the cash
budget is of providing the cash position of company at any time period. Cash budget also
provides budgeted analysis between the actual and budgeted variances of cash flows. Present
report is based over the cash flow budget reflecting the different incomes and expenditures of
cash budgets.
TASK 1
a) Cash budget of the company for the month of October, November and December 2018.
Cash budget is an estimation of cash flows of the business over a given period of time.
Cash flow budget provides an overview to the company about the inflows and outflows in
carrying out particular activity or operation. This is a critical element in business as number of
management decisions are based on the cash budgets prepared by them. This helps business in
identifying whether they will be available with sufficient cash or not for carrying out the
business operations (Adam and Bevan, 2016). Cash budget is prepared on number of
assumptions taken by the management. They are mainly prepared over the projections about
future income and expenditures.
The estimates are made by management after analysing the internal as well as external
factors that may influence the business operations. They are also prepared by referring to the
estimated made in previous budgets. They identify the variances that have occurred in previous
budgets and considers those causes in the current budget. Adjustments related with inflations,
legal and other relevant factors like market conditions are taken into account for preparing the
cash budgets every year. Cash budgets help the companies in proper allocation of resources
between the departments and activities. They help the company to control the unproductive costs
and expenditures by identifying them on comparisons after the completion of period for which
budget was prepared by the organisation.
Cash Flow Budget
Particulars September October November December January
Sales Revenue 48000 58000 60000 59000
Cash inflows
Opening cash inflow 5000 1450 13900 -37850 -22000
Cash Sales 19200 23200 24000 23600
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