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The primary purpose of a cash budget, also known as a cash flow projection, is to help you plan and strategize

to be able to cover upcoming expenses. The process of listing anticipated expenses and anticipated cash on hand, and then comparing the two amounts, enables you to see where you may come up short, and it provides you with a time frame for developing a solution. Cash budgets are, of necessity, based on speculation. However, the more realistic your numbers, the better they will help you plan. Sponsored Link Financial Modelingwww.Quantrix.com Download Free 30 Day Trial Now. More Flexible than Spreadsheets. Anticipated Revenue The foundation of your cash budget is your anticipated available cash, or the amounts that you expect to have on hand during the budget period to cover expenses. Unlike an income statement, which reflects taxable earnings, a cash budget also includes capital infusions such as loans, investments and personal funds that you use to keep your business operating. Because income from sales or services is one source of business revenue, the available funds in your cash budget will roughly correlate with anticipated sales; however, these two amounts will not be exactly the same. Anticipated Expenses The section of your cash budget that covers anticipated expenses is a summary of everything your business will have to pay during the budget period. It differs from the expense section of an income statement, because some business expenditures are not tax-deductible, such as owner draws or loan principal payments. Other outlays, such as depreciable equipment, may involve large payments up front, although you are only allowed to write off these expenses over time. Addressing Shortfalls

3)It influences the amount of borrowed capital needed to finance the production and the necessary cash flow to operate the business-controller. Next in the process forecast procedures and methods for analyzing data are determined. Forecasting the future is always amatter of probabilities rather than certainties.4)It provides a basis for sales quota assignments to various segments of the salesforce-sales manager. personnel. divisional.Sales Forecast A sales forecast is the estimated dollar or unit sales for a specific future time period basedon a proposed market plan and a assumed market environment. It beginswhen an objective is determined. 3)Develop forecast procedure. equipments.1)A sales forecast becomes a basis for setting and maintaining a productionschedule. Following are the steps in the forecasting process: 1)Forecast objective 2)Determine dependent & independent variables. Each reason has an impact on other business function. parts& raw-materials-purchasing.total company sales.The Forecasting Process. Sales manager forecast customer. Today imdustry sales.-manufacturing2)It determines the quantity and timing of needs of labour. tools.The forecasting procedures refers to a series of procedures used to forecast. Often assumptions must be madeabout the forecast. national & sometimes world sales. If the procedures have not been used before.A key factor to a company’s success-sometimes to its survival-is how well the salesmanager forecasts the company’s future product sales. Data are then gathered and analyzed. .A sales forecast is important for at least five reasons. the firm maywant to test them. sales territory. They forecast short-range andlong range demands.regional .5)It is the overall base that determines the company’s business & marketing plans which are further broken down into specific goals-marketing officer. industry product categories. company product lines and individual products are the major elements that must be taken into account when estimating futuredemand for company’s products.

8)Make & finalize forecast. In absense of controlling. Therefore. Sales Forecasting Methods.Example of “Mathematical Methods” are test market. Two categories of sales forecasting methods exist. According to Billy Goetz. planning and controlling reinforce each other. The scope of activities if both are overlapping to each other. “Survey Methods” are qualitative &include executive opinion. 4. 5. Planning and controlling reinforce each other. planning becomes a meaningless exercise. controlling activities becomes baseless and without controlling. Activities are put on rails by planning and they are kept at right place through controlling. 9 ) E v a l u a t e r e s u l t s v s f o r e c a s t . 6)Gather and analyze data 7)Present assumptions about data. . trendanalysis and correlation analysis Planning and controlling are two separate fuctions of management. 2.4 ) S e l e c t f o r e c a s t a n a l ys i s m e t h o d 5)Total forecast procedure. sales force composite & customer’s intention surveys. yet they are closely related. Planning preceeds controlling and controlling succeeds planning. naïve models. Without the basis of planning. Each drives the other function of management. market factors. " Relationship between the two can be summarized in the following points 1. Planning and controlling are inseperable functions of management. 3. no purpose can be served by. The process of planning and controlling works on Systems Approach which is as follows : Planning → Results → Corrective Action Planning and controlling are integral parts of an organization as both are important for smooth running of an enterprise.

it give us stimulus to make better plans. Therfore. the strong relationship between the two is very critical and important. There controlling comes to the rescue. planning and controlling are inseperate functions of a business enterprise. In the present day environment.In the present dynamic environment which affects the organization. it is quite likely that planning fails due to some unforeseen events. . Once controlling is done effectively.