man 470 – berk tuncali 1. what is cash management? it is the process of forecasting, collecting,...
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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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