Finance - Cash Budgets

Question 1

What is the purpose of a cash budget ?

Answer 1

A document that is prepared to help manage cash flow. You use it to plan for the future

Question 2

What are the advantages of a cash budget ?

Answer 2

1. It can show if additional finance is required
2. It can help in making decisions and budgeting
3. To show if the business will have a surplus or deficit of cash
4. it can identify suitable times for a business to make an investment

Question 3

What are cash flow problems ?

Answer 3

1. Sales are decreasing
2. Purchases are increasing
3. wags are increasing
4. pay for an asset in full

Question 4

What are the solutions for the cash flow problems ?

Answer 4

1. • increasing the selling price
   • increase promotion
2. • Find a cheaper supplier
   • Ask for bulk buying
   • ask for trade credit - so pay the supplier at a later date
3. • Reduce staff hours
   • offer no overtime
   • make redundancies
     4.
   • lease the asset
   • use purchase hire