Uses of the Cash Flow Budget - Department of...
Transcript of Uses of the Cash Flow Budget - Department of...
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Uses of the Cash Flow Budget
1. Provides the best measure of Liquidity – your ability to meet financial obligations as they become due without disrupting the continuing operation of your business.
2. Used as a Projected Statement – it helps you formalize the overall planning process.
3. Can assist you in evaluating Borrowing Needs and Repayment Plans.
4. Serves as a Financial Control Tool – by allowing you to monitor Actual Performance versus Budget Projections.
5. Formalizes the process of Integrating Plans and Objectives for the various enterprises within the business.
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Uses of the Cash Flow Budget (cont.)
6. Directs attention to the Management of Cash Reserves.
7. By allowing you to formulate projection estimates for several alternative outcomes, it provides a practical tool for analyzing the Impact of Risk (Uncertainty).
8. Helps you assess the relationships among your Production, Marketing, and Financing plans.
9. As an Investment Analysis Tool – compare cash flows projected under current operations and modified operations.
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