Accounting Analysis

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Accounting Analysis of Congo Limited

Accounting Analysis

Assignment 2


The following is the monthly cash budget for the months of February, March and April with the ending balance at each month. In the following cash budget, the component which we have included are describe below and the reason why they are added or subtracted from the cash budget.

The cash budget is a report which shows cash inflows and outflows which are plan by the company and used to calculate its cash requirements in the short term, and particular attention is given towards the planning in view of surpluses and shortages of cash. A company that expects cash surplus can plan investments in the short term, while a company missing cash waiting must have the funding in the short term. The necessary information for the process of short-term financial planning is the forecast of sales. This forecast is predicts sales of the company for a specified period, which provide the department of managing their finance. Based on this forecast, the finance manager calculates the monthly cash flows resulting from projected sales and the disposition of funds related to production, the inventory and sales (Davis C., Davis E., 2011, pp. 268).

The forecasts of sales should be based on an analysis of the data that is internally or externally available or a combination of both.

External Predictions: Based on the relationship between sales of the company and certain indicators important as external economic GDP among others.

Internal Predictions: Based on an accumulation of sales forecasts obtained from the own sales channels the company

Combined Forecasts: Generally, the companies use a combination of data on external and internal forecasts for sales forecasting final. Internal data provide insight into sales expectations and external data provide a means to adjust these expectations in accordance with the general economic factors.

Components of cash budget 

Cash Income are all cash inflows of a company that occur in a given financial period.  Disbursements of cash are all the costs of cash made ??by the company during a specific financial period, the most common are:

Cash purchases

Settlement of accounts payable

Rental payments

Wages and salaries

Tax payments

provisions of funds for active fixed

Interest payments

Payments of cash dividends

Payments of principal

Repurchases or withdrawals of shares

Net cash flow: It is the mathematically difference between the income the company's cash and cash disbursements in each period (Don R., Maryanne M., & Guan L., 2007, pp. 260).

Final Cash: The initial amount of the company and its cash flow net of the period.

Total Financing Required: It is the amount of funds required by the enterprise if the effective end of the period is less than the desired minimum cash balance, commonly, is represented by documents payable.

Excess cash balance: The amount that the company has available to invest if the cash end of the period is greater than the desired minimum cash balance.

Selection of Credit

Accounts receivable represent the concession of credit to the company to its customers. The granting of credit to customers is a cost for doing business. By keeping your money in accounts receivable, the company loses ...
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