MAN 470 – Berk TMAN 470 – Berk TUNCALIUNCALI1

What is Cash Management?

It is the process of forecasting, collecting, disbursing,

investing and planning for the cash a company needs

to operate smoothly.

Ford motor company almost went bankrupt after a month of opening due to a cash crises before becoming on of the largest companies in the

world.

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Cash Flow: a method of tracking a company’s liquidity and its

ability to pay its bills and other financial obligations on time

by tracking the flow of cash into and out of the business over

a period of time. Cash Flow Cycle: Time lag between paying suppliers for merchandise or materials and receiving payment from customers.

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Preparing a Cash BudgetCash Budget: is a map showing the amount and timing

of

cash receipts and cash disbursements on daily, weekly and

monthly basis. It requires 5 steps to create;

1. Determining an adequate minimum cash balance

2. Forecasting sales

3. Forecasting cash receipts

4. Forecasting cash disbursements

5. Estimating the end of the month cash balance

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Cash Budget is usually prepared in 3 separate scenarios:

1.Pessimistic2.Most Likely3.Optimistic

Cash Budget Diagram on Page 302

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THANK YOU

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