How to analyze a cash budget

As a business owner or financial manager, it’s essential to have a cash budget in place to ensure that you have enough cash on hand to meet your financial obligations. A cash budget is a financial plan that outlines expected cash inflows and outflows over a particular period, typically a month or a year. Analyzing your cash budget is a critical process that can help you identify potential shortfalls or surpluses in your cash flow, enabling you to make informed financial decisions. In this article, we will explore how to analyze a cash budget.

Review the Opening and Closing Cash Balances

The first step in analyzing a financial budget is to review the opening and closing cash balances. The opening cash balance is the amount of cash you have at the beginning of the budget period, while the closing cash balance is the amount of cash you expect to have at the end of the period. By comparing the opening and closing balances, you can determine whether your cash position is improving or deteriorating. A positive change means that your business has more cash on hand than at the beginning of the budget period, while a negative change means that your business has less cash.

Evaluate the Timing of Cash Inflows and Outflows

The next step is to evaluate the timing of cash inflows and outflows. Your cash budget should outline when you expect to receive cash from sales, investments, loans, or other sources, as well as when you expect to pay for expenses such as salaries, rent, and inventory. By looking at the timing of cash inflows and outflows, you can identify periods when your business may experience a cash shortfall or surplus. For example, if your cash inflows are low in the first quarter, but your expenses are high, you may need to take steps to manage your cash flow, such as reducing expenses or increasing sales.

Analyze the Cash Flow Projections

The next step is to analyze the cash flow projections in your budget. Cash flow projections are estimates of the expected cash inflows and outflows during the budget period. Your cash flow projections should be based on realistic assumptions, such as sales projections, accounts receivable and accounts payable, and capital expenditures. By reviewing your cash flow projections, you can determine whether they are accurate and realistic. If your projections are unrealistic, you may need to adjust them to better reflect your actual cash inflows and outflows.

Compare Actual Results to Budgeted Results

The final step is to compare actual results to budgeted results. Once the budget period is over, you should compare the actual cash inflows and outflows to the budgeted amounts. By comparing actual results to budgeted results, you can identify any significant variances and determine why they occurred. For example, if your actual cash inflows were lower than your budgeted amounts, you may need to review your sales strategy and adjust it to increase revenue.

Company cash budget case study example

Here is a company cash budget case study example with an answer:

Case Study:

XYZ Company is a retail business that sells clothing and accessories. The company is preparing a cash budget for the upcoming year, and they have gathered the following information:

  • Expected sales for the year are $1,200,000.
  • The cost of goods sold is 60% of sales.
  • Company expects to receive 80% of its sales in cash and the remaining 20% in 30 days.
  • The company’s total expenses, including salaries, rent, and other expenses, are $800,000 for the year.
  • Company expects to pay 70% of its expenses in cash and the remaining 30% in 60 days.
  • The company plans to purchase new equipment for $100,000 in six months.
  • Company has a cash balance of $50,000 at the beginning of the year.


To prepare a cash budget for XYZ Company, we need to project the cash inflows and outflows for each month. Here is an example of a monthly cash budget for the company:

Month Cash Inflows Cash Outflows Cash Balance
Jan $96,000 $66,667 $79,333
Feb $96,000 $66,667 $108,667
Mar $96,000 $66,667 $137,333
Apr $96,000 $66,667 $166,000
May $96,000 $66,667 $194,667
Jun $96,000 $66,667 $223,333
Jul $96,000 $66,667 $252,000
Aug $96,000 $66,667 $280,667
Sep $96,000 $86,667 $290,000
Oct $96,000 $86,667 $299,333
Nov $96,000 $86,667 $308,667
Dec $96,000 $186,667 $217,000

To calculate the cash inflows for each month, we need to first calculate the total sales for the month by multiplying the expected sales by the percentage of sales expected to be received in cash or on credit. Then we subtract the cost of goods sold to get the cash inflows. For example, in January, the cash inflows are:

Total Sales = $1,200,000 / 12 = $100,000 per month Cash Sales = $100,000 x 80% = $80,000 Credit Sales = $100,000 x 20% = $20,000 Cash Inflows = Cash Sales – Cost of Goods Sold = $80,000 – ($100,000 x 60%) = $80,000 – $60,000 = $20,000

To calculate the cash outflows for each month, we need to add up the total expenses for the month and then multiply them by the percentage of expenses expected to be paid in cash or on credit. For example, in January, the cash outflows are:

Cash Expenses = $800,000 / 12 x 70% = $46,667

Credit Expenses = $800,000 / 12 x 30% = $20,000

How to do a Cash budget projection using Microsoft Excel

Creating a budget projection is a useful way to manage your finances and stay on top of your expenses. Microsoft Excel is a great tool for creating a budget projection, as it allows you to organize your financial data and perform calculations quickly and easily. Here are the steps to create a budget projection using MS Excel:

Step 1: Create a new spreadsheet

Open a new spreadsheet in Excel and set up the columns and rows for your budget. Label the first column as “Category” and the next column as “Actuals”. In the third column, label it as “Budget” and in the fourth column, label it as “Projection”.

Step 2: Enter the actuals

Enter your actual income and expenses in the second column, labeled as “Actuals”. This information should be based on your past financial statements, such as your bank statements, receipts, and invoices.

Step 3: Create the budget

Next, create a budget based on your actuals. In the third column, labeled as “Budget”, list all the categories of income and expenses, such as rent, utilities, groceries, transportation, and entertainment. Estimate the amount of money you will need for each category and enter it in the budget column.

Step 4: Calculate the variance

To calculate the variance, subtract the budgeted amount from the actual amount for each category. For example, if your actual income was $2,500 and your budgeted income was $2,000, the variance would be $500. Enter the variance in the fifth column, labeled as “Variance”.

Step 5: Create the projection

To create a projection for the upcoming period, estimate how much money you will earn and spend in each category. Use the variance to adjust your budget projection accordingly. For example, if you spent more on groceries than budgeted in the past period, you may want to increase the budget for groceries in your projection.

Step 6: Review and adjust

After creating the projection, review it to ensure it aligns with your financial goals. If you find that your projected expenses exceed your income, you may need to adjust your budget by cutting back on expenses or finding ways to increase your income.

Step 7: Update your budget projection

Finally, update your budget projection regularly, as your actual income and expenses may differ from your projections. You can compare your actuals to your projection and adjust your budget as needed to ensure you stay on track.

Cash Budget Projection Homework Help

Cash budget projection is a vital aspect of financial planning for any business, big or small. A cash budget projection is a financial plan that estimates the cash inflows and outflows for a specific period, typically a month or a year. Cash budget projections help businesses to plan and allocate their financial resources more effectively, make informed financial decisions and avoid cash flow problems.

If you’re a student of finance or accounting, you may be assigned homework on cash budget projection. This homework is designed to help you understand the fundamental concepts of financial budget projection, learn how to create a cash budget projection and analyze it. Here are some tips that can help you with your cash budget projection homework:

Understand the basics of cash budget projection

Before you start working on your cash budget projection homework, make sure you understand the basics of cash budget projection. This includes knowing the difference between cash inflows and outflows, understanding how to create a budget, and knowing how to calculate variances.

Gather the necessary information

To create a cash budget projection, you need to gather all the necessary information about your business’s financial activities. This includes information about your sales, expenses, and other cash inflows and outflows.

Use Microsoft Excel or other software tools

Using software tools such as Microsoft Excel can help you create a professional-looking budget projection that is easy to read and understand. You can use Excel to create tables, charts, and graphs that show your projected cash inflows and outflows for each month or quarter.

Analyze your cash budget projection

Once you have created your budget projection, you need to analyze it to identify areas where you can make improvements. This includes identifying areas where you can reduce expenses, increase sales, or improve cash flow.

Seek budget projection homework help if needed

If you’re struggling with your budget projection homework, don’t be afraid to seek help. You can consult Reliable Assignments Help website for help.

Cash budget projection is an important aspect of financial planning for businesses, and understanding how to create and analyze a cash budget projection is essential for finance and accounting students. By following the tips above, you can complete your cash budget projection homework with confidence and accuracy.

Top 10 Cash Budget Projection Topics

If you are looking for cash budget projection assignment topics, here are some ideas:

  • Creating a cash budget projection for a small business
  • Analyzing the cash budget projection for a startup company
  • Comparing the cash budget projection for two different companies in the same industry
  • Investigating the impact of changes in sales or expenses on the cash budget projection
  • Examining the role of a cash budget projection in financial planning and decision-making
  • Identifying the benefits and limitations of using a cash budget projection
  • Evaluating the accuracy of a cash budget projection and proposing improvements
  • Investigating the relationship between cash budget projection and other financial statements, such as income statement and balance sheet
  • Examining the cash budget projection for a non-profit organization
  • Analyzing the cash budget projection for a government agency.

These topics can be adapted to suit different levels of academic study, from high school to undergraduate and postgraduate levels. Remember to choose a topic that interests you and allows you to demonstrate your understanding of cash budget projection principles and techniques. Get assignment help from experts today!

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