USES AND ADVANTAGES OF THE CASH FLOW BUDGET (1) FORMALIZES THE ENTIRE PLANNING PROCESS BY PROVIDING THE “BEST ESTIMATE” OF HOW THE BUSINESS PLANS TO OPERATE.

Slides:

Advertisements

Similar presentations

Chapter 13 Cash Flow Budgeting

Advertisements

Cash Flow Budgeting: Chap.13 §What is a cash flow budget used for? §What items are included in cash inflows and cash outflows? §What adjustments can be.

Your Net Income Statement Gerry Schwab, Barbara Dartt, Sherrill Nott, & Roger Betz FIRM AoE Team.

Chapter 11 – Forecasting and Short-Term Financial Planning  Learning Objectives  Understand how sales forecasts are used to predict cash inflow  Understand.

Chapter 3 Cash Flow and Financial Planning. Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 3-2 Analyzing the Firm’s Cash Flows Cash flow.

2006 Cash Flow Statement Sources of cash: Beginning cash balance Cash receipts from product sales Other sources of cash Total sources of cash Uses of cash:

Chapter 3 Acquiring and Organizing Management Resources

AGEC 489/689 Spring 2009 Overview of Financial Statements Slide Show #2.

Forecasting and Short-Term Financial Planning

Financial Statements - Forecast

McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Short-Term Financial Planning Chapter 16.

Chapter 13 Cash Flow Budgeting

Accounting Fundamentals Accounting Fundamentals Structure of Financial Statements Agribusiness Finance LESE 306 Fall 2009.

AGEC 432 – Finance Spring 2007 Structure of Financial Statements.

AGEC 489/689 Spring 2009 Detailed View of Financial Statement Linkages Slide Show #3.

Financing Unit 6.

Financial and Economic Terms. General Accounting and Financing Terms  Generally Accepted Accounting Principles (GAAP) – Concepts, philosophies and procedures.

What does a cooperator receive? 1.A complete record of his farm business Each farmer maintains a complete production and financial record.

© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Short-Term Finance and Planning Chapter Eighteen Prepared by Anne Inglis, Ryerson University.

Chapter 20 The Budgeting Process.

Name DivRoll No Gufran Siddiqui A 53 Aabid Kalokhe a 20 Shehzad Khan A 30 Asif valsangkar a 61 Farhan Ansari a 04 Shoaib shaikh a 50 Zeeshan azmi a 06.

PLAN PERFORM EVALUATE REPORT 1 Why Budget? If you know where you are going, you’re more likely to get there….

FINANCIAL MANAGEMENT FOR SMALL AND MEDIUM ENTERPRISES

4 Financial Planning and Forecasting ©2006 Thomson/South-Western.

Copyright © 2009 Pearson Prentice Hall. All rights reserved. Chapter 3 Cash Flow and Financial Planning.

Goals  Prepare a pro forma cash flow statement.  Prepare a pro forma income statement.  Prepare a pro forma balance sheet.

7-1 Fundamental Managerial Accounting Concepts Thomas P. Edmonds Bor-Yi Tsay Philip R. Olds Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights.

Record Keeping. Why keep records? ▸ Determine profit or loss ▸ Provide information for analysis  ways to improve  weak and strong points  determine.

Copyright © 2009 Pearson Prentice Hall. All rights reserved. Chapter 3 Cash Flow and Financial Planning.

© 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8e C H A P T E R 12 SLIDE 1 Financial Planning Financial Records and Financial Statements.

Income Statements Uses ▸ Summarize revenues and expenses ▸ Determining profit or loss ▸ Explaining changes in owner equity ▸ Supporting Loan Application.

Stock Market Analysis and Personal Finance Mr. Bernstein The Three Primary Financial Statements September 2015.

© Mcgraw-Hill Companies, 2008 Farm Management Chapter 13 Cash Flow Budgeting.

McGraw-Hill/Irwin Chapter Seven Planning for Profit and Cost Control.

Managerial Accounting

Acquiring and Organizing Management Information Chapter 3.

C H A P T E R 5 Operational Budgets. Learning Objective 1 Describe the importance of personal budgeting.

AGEC 407 Cash Flow Budgeting What is a cash flow budget? –Summary of cash inflows and outflows for a business over a given period of time –Most important.

New Venture Finance. First steps – how much $ does your new venture need? Must assemble pro forma financials to test assumptions (and convince investors.

CASH FLOWS By: Miss Siti Norhidayah Hamid. FRS 107 Cash Flow Statements requires a cash flow statement to be presented as integral (memenuhi) part of.

IHG Cash flow statement. Cash flow statement- operations.

Cash Flows and Financial Management. PREPARING A STATEMENT OF CASH FLOWS Summarizes all cash inflows and outflows affecting a business by Month Quarter.

Planning for Profit and Cost Control Chapter 14 McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

1 STATEMENT OF CASH FLOWS – IAS 7 Chapter Provides information about the cash receipts and cash payments of a business entity during the accounting.

Financial Management Glencoe Entrepreneurship: Building a Business Analyzing Your Finances Managing Your Finances 21.1 Section 21.2 Section 21.

The Importance of Understanding Finance The Parsley Patch! Problem? Solution? Outcome?

Financial Projections as part of Business Plan by Ketoki Basu,

CHAPTER 12 FINANCIAL MANAGEMENT Financial Planning FINANCIAL PLANNING Ongoing Operations Revenue – all income that a business receives over a period.

Module 21 Budgeting and Profit Planning (omit pp: 21-4 to 21-7)

3-1 Copyright © 2009 Pearson Prentice Hall. All rights reserved. Chapter # 2 Financial Planning.

Farm Management Chapter 3 Acquiring and Organizing Management Resources.

Cash Flow Management and Budgeting for Beef Production An Sci 426.

7 - 1 Chapter 7 The Master Budget Objective 1 Explain the major features and advantages of a master budget.

IENG 216 Budgeting.

Cash Flow and Financial Planning

Financing Unit 6.

Three Levels of Planning

Chapter 13: Kay and Edwards

Income Statement Record Keeping Curriculum

FINANCIAL MANAGEMENT FOR SMALL AND MEDIUM ENTERPRISES

Money Grows on Trees, Right?

Cash Flow Budgeting: Chap.13

Income Statement.

(Sources and Uses of Funds) (Flow of Funds Statement)

CHAPTER 8 FINANCIAL PLANNING. CHAPTER 8 FINANCIAL PLANNING.

Cash Flow and Financial Planning

Cash Flow and Financial Planning

FINANCIAL MANAGEMENT FOR SMALL AND MEDIUM ENTERPRISES

FINANCIAL MANAGEMENT FOR SMALL AND MEDIUM ENTERPRISES

Process of Developing Project Cash Flows

Presentation transcript:

USES AND ADVANTAGES OF THE CASH FLOW BUDGET (1) FORMALIZES THE ENTIRE PLANNING PROCESS BY PROVIDING THE “BEST ESTIMATE” OF HOW THE BUSINESS PLANS TO OPERATE FOR THE COMING YEAR. (2) PROVIDES PROJECTED REVENUE AND EXPENSE ESTIMATES NECESSARY TO PREPARE A PRO-FORMA INCOME STATEMENT.

(3) PROVIDES AN OPPORTUNITY TO EVALUATE BORROWING AND REPAYMENT PLANS. (4) SERVES AS A “FINANCIAL CONTROL” TOOL. (5) ALLOWS COORDINATION AMONG THE BUSINESS PLANS OF VARIOUS ENTERPRISES. (6) DIRECTS ATTENTION TO THE MANAGEMENT OF CASH RESOURCES.

STEPS IN CASH BUDGETING (1) PLAN CROPPING PROGRAM (2) SUMMARIZE THE MAJOR CROP COSTS (3) PLAN LIVESTOCK PURCHASES AND SALES (4) BUDGET CROP USAGE AND FEED REQUIREMENTS (5) PLAN CAPITAL EXPENDITURES AND REPAIRS (6) PROJECT TERM LOAN PAYMENTS (7) PLAN THE FAMILY LIVING BUDGET

CASH FLOW MANAGEMENT WHEN CASH AVAILABLE IS LESS THAN CASH REQUIRED, SHORT-TERM BORROWING MAY BE NECESSARY. (1) REVOLVING LINE OF CREDIT (2) NON-REVOLVING LINE OF CREDIT (3) SHORT-TERM NOTES

WHEN CASH AVAILABLE IS GREATER THAN CASH REQUIRED THE BUSINESS MAY: (1) MAINTAIN A DESIRED MINIMUM CASH BALANCE (2) PAY INTEREST ON SHORT-TERM BORROWING (3) REPAY SHORT-TERM BORROWED PRINCIPLE (4) TRANSFER TO SAVINGS ACCOUNT

NEVER PLAN A ROLLOVER OF AN OPERATING LOAN. IF THERE IS DIFFICULTY IN MEETING TERM-DEBT PAYMENTS, LOANS MAY NEED TO BE RESTRUCTURED TO MATCH CASH AVAILABLE TO REPAYMENT PLANS. THE CAPACITY TO SERVICE CURRENT AND NON- CURRENT DEBT IS RELATED TO THE DEBT STRUCTURE DEBT STRUCTURE SHOULD MATCH THE TERM OF THE LOAN TO THE ANTICIPATED LENGTH OF TIME THE ASSETS WILL BE USED IN THE BUSINESS

Pro Forma Income Statement Pro forma statements are projected financial statements that embody a set of assumptions about future performance and funding requirements. While a cash flow budget allows the evaluation of marketing and production plans, and financing requirements, the cash flow budget does not measure profitability.

Profitability is best evaluated using a projected “pro forma” income statement. However, the starting point for a pro forma income statement is a well prepared cash flow budget.

PRO FORMA INCOME STATEMENT (1) USE CASH BUDGET INFORMATION TO ESTIMATE REVENUE FORM CROP AND LIVESTOCK PRODUCTION, CUSTOM WORK, GOVERNMENT PAYMENTS, ETC. (2) USE CASH BUDGET INFORMATION TO ESTIMATE OPERATION EXPENSES AND FEED PURCHASES. (3) INCLUDE DEPRECIATION FROM DEPRECIATION SCHEDULES. (4) USE INTEREST EXPENSES FOR TERM LOANS AND ESTIMATED INTEREST EXPENSES FROM ANTICIPATED OPERATING LOANS

(5) CAPITAL ADJUSTMENTS FOR ESTIMATED SALES OF CAPITAL ASSETS (6) NON-FARM INCOME AND TAXES FROM THE PRO-FORMA INCOME STATEMENT, PROFITABILITY CAN BE ESTIMATED.