HBM - Cash Budgets (Part 2)

HBM - Cash Budgets

(Part 2)

Let's see what you can remember!

Multiple Select

 

What are the main purposes of budgeting? (choose all that apply)

• To plan for the future

• Compare actual figures with performance

• To analyse past performance

• To plan profits/losses

• Predict a surplus/deficit​

Multiple Choice

Cash left at the end of the month after all payments have been taken away from the business receipts.

• Opening balance

• Cash Available

• Receipts

• Payments

• Closing Balance

Multiple Select

Examples of Payments (Choose all the correct answers):

• Sales

• Bank Loan

• Wages

• Purchases

• Rent

Multiple Choice

 

All the money coming into the business such as sales.

• Opening balance

• Cash Available

• Receipts

• Payments

• Closing Balance

Multiple Choice

 

This is the total amount of cash available to the organisation each month during the budgeted time period.

• Opening balance

• Cash Available

• Receipts

• Payments

• Closing Balance

Multiple Select

Examples of Receipts (Choose all the correct answers):

• Sales

• Bank Loan

• Wages

• Purchases

• Government Grant

Multiple Select

Which of the following are true of cash budgets? (choose all that apply)

• They help to plan profits/losses

• They help managers in their decision making.

• In a cash budget, a 'shortage' of cash is a surplus.

• Opening balance + total receipts = closing balance

Hotspot

Where is the cash available?

Hotspot

Where is closing balance?

Hotspot

Where is opening balance?

Reorder

Cash Budget headings - what is the correct order?

• Opening Balance

• Receipts

• Cash Available

• Payments

• Closing Balance

1

2

3

4

5

• 1
• 2
• 3
• 4
• 5

Multiple Choice

Cash inflow or outflow?

Sale of inventory

• Inflow

• Outflow

Multiple Choice

Cash inflow or outflow?

Purchase of inventory​

• Inflow

• Outflow

Multiple Choice

Cash inflow or outflow?

Dividend payments​

• Inflow

• Outflow

Multiple Choice

Cash inflow or outflow?

Sale of a non-current assets

• Inflow

• Outflow

Cash Flow Problems

• low sales

• too much money tied up in inventory

• customers taking too long to pay their bills

• suppliers not allowing credit or a limited credit period

• too many drawings by owners

• over-investment in new assets such as machinery or equipment

• an increase in expenses

• too many unpaid debts

• seasonal demand

Dropdown

There are many reasons why a business may experience cash flow problems. A few include:



- ​

Select answer

sales ​

- too ​

Select answer

money tied up in inventory



- owner taking too much money out the business, this is also known as ​

Select answer

- over-investment in new non current assets such as ​

Select answer

Multiple Select

Which are examples of cash flow problems? (choose all that apply)

• High drawings from owner

• Too much inventory ​

• High profits ​

• Not allowing customers too much credit ​

• Seasonal demand ​

Fill in the Blank

Impact of Cash Flow Problems:

(what is the missing word??)

A firm may need to find a cheaper ?? which may reduce the quality of products

Fill in the Blank

Impact of Cash Flow Problems:

(what is the missing word??)

The business may have to offer ?? to increase sales.

Multiple Choice

Cash flow solution: Increase advertising or sales promotion

What is a possible justification to this solution?

• It will reduce the cost of purchases

• It will reduce the number of people who owe the business money

• Will help to cover immediate cash flow problems

• Will increase sales meaning more cash coming in

Multiple Choice

Cash flow solution: Find a cheaper supplier

What is a possible justification to this solution?

• It will reduce the cost of purchases

• It will increase the cost of purchases

• It will give the business time to raise the cash

• It will encourage customers to pay quickly

Multiple Choice

Cash flow solution: Offer discounts to customers for paying up front

What is a possible justification to this solution?

• It will reduce the cost of purchases

• It will reduce the number of people who owe the business money

• Will help to cover immediate cash flow problems

• Allows a business to spread the cost of purchases

Multiple Choice

Cash flow solution: Lease machinery or equipment

What is a possible justification to this solution?

• It will reduce the cost of purchases

• allows a business to spread the cost

• It will give the business time to raise the cash

• It will increase sales

Multiple Choice

Cash flow solution: Apply for a loan or overdraft

What is a possible justification to this solution?

• It will reduce the cost of purchases

• allows a business to spread the cost

• Will help to cover immediate cash flow problems

• It will increase sales

Match

Match the following

• Find a cheaper supplier

• Lease machinery or equipment

• Sell any assets that are not being used effectively

• Apply for a loan or overdraft

• Offer discounts to customers for paying up front or paying for goods quickly

this will reduce the cost of purchases

allows to spread the cost of purchase

release cash that can be used elsewhere

help cover immediate cash flow problems

encourage them to pay quickly

• this will reduce the cost of purchases

• allows to spread the cost of purchase

• release cash that can be used elsewhere

• help cover immediate cash flow problems

• encourage them to pay quickly

Open Ended

Describe the impact on an organisation of having poor cash flow. ( 2 marks)

Draw

Brain Dump

(Write/draw anything you can remember from today's lesson)