CB 3.

2 CASH BUDGET
 CB

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 CASH BUDGET

Important tool in Cash Show projected Cash Inflow

01 Management 02 (cash received) & Cash Outflow
(cash disbursement)

Determine Cash Management

03 Projected – Monthly, Weekly or
Daily 04 Strategy:
- Borrow when cash is deficit /
- Invest when cash is surplus
STEP TO CONSTRUCT CASH BUDGET
STEP 4

STEP 3 -Prepare Cash

Reconciliation
STEP 2 - Determine whether that
-Determine the Net Cash month is either deficit or
Flow (NCF) surplus.
STEP 1 - Determine the amount
- NCF = TCI – TCO
of purchases and
- NCF = a – b
- Determine time frame payment within the right
to construct the cash time frame
budget - Determine total
- Determine amount of amount of cash
sales include cash and outflow
credit within the right
time frame
- Determine total amount
of cash inflow
 IMPORTANT

- Bad Debt - SALES & PURCHASES

- Uncollected Debt need to be place at the right
month
- Depreciation
- Ending Balance last month
become Beginning Balance
ALL NOT INVOLVE IN for next month.
CASH BUDGET
 EXAMPLE
Month Sales Prepare Sweethermanaaas Bake & Co. cash budget for first quarter 2019.
Cash Sales are 50% of Total Sales, Balance 60% collects One Month after
Oct 18 2000 sales and 40% collects Two Month after Sales
Nov 18 2500 Material Purchase are made One Month Before Sales (40%), 50% in Cash,
and balance will be paid equally in next Two Months
Dec 18 3200 Fixed Expenses; Depreciation RM 300, Rent-RM400, Selling & Admin-RM200,
Interest on L/term debt-RM 100
Jan 19 2000 Buy new machine at RM2300, pay 20% in January, and balance pay in Feb
Feb 19 3000 Cash Balance in Dec is RM 500, and Minimum Cash Balance is set at RM500
Any Short-term borrowing cost 10%
Mar 19 2500
April 19 3500
SALES = Cash Sale + Credit Sale
1. Total all the % of collection of sales.
2. If > 100% - should separate between cash and credit (cash is cash), balance of credit should be 100%
3. If < 100% - direct collection from sales.
STEP 1
Sweethermanaaas Bake & Co. Cash Budget
For the First Quarter 2019. 1
Time frame

Dec Jan Feb Mar April

(a) Inflows: 2
Sales 3200 2000 3000 2500 3500 Amount
3 of sales
Cash Sales (50%) 1600 1000 1500 1250 1750
Credit Sales (50%) 4 1600 1000 1500 1250 1750
1 month after sale (60%) 960 600 900 750
2 month after sales (40%) 5 500 640 400 600
Total Cash Inflows 6 2460 2740 2550
STEP 2
Sweethermanaaas Bake & Co. Cash Budget
For the First Quarter 2019.

Dec Jan Feb Mar April

Sales 3200 2000 3000 2500 3500
(b) Outflows:
Purchases (40%) month before sales 1 800 1200 1000 1400
Cash Payment (50%) 400 600 500 700
Credit Payment (50%)
2 400 600 500 700
1 month after purchases (50%) 320 200 300 250
2 month after purchases (50%) 320 200 300
Rent 400 400 400
Selling & Admin 200 200 200
Interest on LTD
3 100 100 100
New machine 460 1840
Total Cash Outflows 4 2280 3540 1950
STEP 3 & 4
Sweethermanaaas Bake & Co. Cash Budget
For the First Quarter 2019.

Jan Feb Mar

Net Cash Flow (NCF) (a-b) 1 180 - 800 600
Cash Reconciliation:
Net Cash Flow 180 - 800 600
Minus: Interest on borrowing - 5.20
Add: Beginning balance 500 680 - 120
Ending balance 680 - 120 474.8
Minus: Minimum cash balance 500 500 500
Surplus / Deficit 180 - 620 - 25.2

Interest on borrowing = 10% x 620 x 1/12 = 5.20