Finance Numericals

Cash flow Statement:  It is a statement which shows cash inflows and outflows in a particular period of a company through operating, investing and financial activities of a company. Operating activities: Inflow: Cash sale, cash received from debtors, fees or commission received etc.  Outflow:  Cash purchase, payment of wages and salary, income tax etc.  Investing activities: ·          Inflows: Sale of fixed assets and investment, Interest or dividend received. ·          Out flows:   Investment purchase etc. Financing activities: ·          Inflows: Issue of share or debenture, Long term loan. ·          Outflows: payment of interest and dividend, payment of loan etc. Importance of Cash flow statement: Investors: ·          With the help of it investors find out how the company uses their money to earn profit. ·          It can help to ascertain the cash position in the company. ·          It helps to determine the cash efficiency

Cash Budget:  It is a financial budget which estimates cash receipt and payment for fixed period in future. It acts as a tool to forecast the cash requirement in future and with the help of it company can fulfil its cash requirements. Methods of cash budget:  There are three methods with the help of which company can prepare its cash budget and the methods are: Receipt and Payment method Adjusted Profit and loss method Balance Sheet method 1.         Receipt and Payment method:  Under this method   all cash receipts and payments are forecast and then, all cash payments are subtracted from all cash receipts of budget period. It is prepared to forecast short term cash requirement. Accruals and adjustments are excluded in this method and also the non-cash items which do not affect the cash flow like depreciation, outstanding expenses. It is uses to control and plan the cash needs over fixed period. Excess of cash receipts are shown as closing balance of cash and if payments