Comment on the results of the shown cash budget prepared below, and suggest possible strategies the company must put in place to improve its cash position in the light of the plans to source a loan. Cash BudgetParticularJanuaryFebruaryMarchAprilMayJuneOpening Balance of Cash15000001000000-1250000-15000000-19237500-3300000Add: Receipt from Customer150000001500000016500000202500002550000029400000Add: Sale of Freehold Premises 25000000 Total Cash available (A)16500000160000001525000052500003126250026100000Less: Outflow of cash Material50000006250000750000010000000950000011000000Labor8000000800000087500001068750095625009000000Overhead250000030000004000000380000055000004400000Purchase of new printing press0000100000000Corporation Tax due for Payment0010000000000Total Outflow of Cash (B)155000001725000030250000244875003456250024400000Closing Cash (A-B)1000000-1250000-15000000-19237500-33000001700000

A cash budget is a financial statement that projects a company's expected cash inflows and outflows…

Answered: Comment on the results of the shown…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Comment on the results of the shown cash budget prepared below, and suggest possible strategies the company must put in place to improve its cash position in the light of the plans to source a loan.

Cash Budget

Particular	January	February	March	April	May	June
Opening Balance of Cash	1500000	1000000	-1250000	-15000000	-19237500	-3300000
Add: Receipt from Customer	15000000	15000000	16500000	20250000	25500000	29400000
Add: Sale of Freehold Premises					25000000
Total Cash available (A)	16500000	16000000	15250000	5250000	31262500	26100000
Less: Outflow of cash
Material	5000000	6250000	7500000	10000000	9500000	11000000
Labor	8000000	8000000	8750000	10687500	9562500	9000000
Overhead	2500000	3000000	4000000	3800000	5500000	4400000
Purchase of new printing press	0	0	0	0	10000000	0
Corporation Tax due for Payment	0	0	10000000	0	0	0
Total Outflow of Cash (B)	15500000	17250000	30250000	24487500	34562500	24400000
Closing Cash (A-B)	1000000	-1250000	-15000000	-19237500	-3300000	1700000

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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