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Cash Budget Format

Find out more about cash budget format.

In this article, you will learn more about cash budget format.

Cash Budget Format

The cash budget is divided into four sections:

  1. Cash receipts: lists all cash inflows excluding cash received from financing
  2. Cash disbursements: consists of all cash payments excluding repayments of principal and interest
  3. Cash excess or deficiency: determines if the company will need to borrow money or if it will be able to repay funds previously borrowed
  4. Financing: details the borrowings and repayments projected to take place during the budget period.

The Cash Budget

Assume the following information for Royal:

  • Maintains a 16% open line of credit for $75,000.
  • Maintains a minimum cash balance of $30,000.
  • Borrows on the first day of the month and repays loans on the last day of the month.
  • Pays a cash dividend of $49,000 in April.
  • Purchases $143,700 of equipment in May and $48,300 in June (both paid in cash).
  • Has an April 1st cash balance of $40,000.

Example

Over to you

Please take some time to review this exercise and when you are ready move on to the next step, where you will find a short quiz.

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