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# Cash Budgeting and Financial Forecasting

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Please address the 17 questions in the case study review and evaluate the case, identifying the decisions to be made pertaining to financial forecasting.

Determine quantitative and qualitative factors pertaining to financial forecasting.

Conclude findings pertaining to a financial forecasting case and provide recommendations for the case at hand.

#### Solution Preview

If we look at the cash surplus and loan requirement data we can find that the maximum monthly cash shortfall of \$60,750, occurs in the month of June and the maximum funds that the clinic require is \$99,000 occurs in the month of February. We can find net projected cash gains in the month of March, April, and May, and the cumulative gain of these months is sufficient to retire the loan during the month of April. But a net cash loss is forecasted for the month of June means that an extension of the budget is required for the entire year.

Please look at the excel sheet for the data.
We have,

Monthly interest on line of credit=0.667%

And,

Monthly Interest on temporary investment of excess cash=0.333%

Also,
Cash at beginning=\$50,000

January February March April May June
Surplus Cash or total loan outstanding -\$48,417 -\$98,844 -\$23,686 \$1,43,847 \$1,69,493 \$1,08,178

As we know that the clinic has \$50,000 balance at ...

#### Solution Summary

The expert examines cash budgeting and financial forecasting. Quantitative and qualitative factors pertaining to financial forecasting is examined.

\$2.19

## Finance: planning process, forecast, budgeting, projection, cash flows

1. The key input to the short-run financial planning process is

1. 1. the cash budget.
2. 2. the pro forma income statement.
3. 3. the cash forecast.
4. 4. the sales forecast.

2.________ forecast is based on a buildup, or consensus, of sales forecasts through the firm's own sales channels, adjusted for additional factors such as production capabilities.

1. 1. An internal sales
2. 2. An external sales
3. 3. A sales
4. 4. A pro forma

3. In cash budgeting, the ________ seasonal and uncertain a firm's cash flows, the ________ the number of budgeting intervals it should use.

1. 1. less; greater
2. 2. more; fewer
3. 3. more; greater
4. 4. less; fewer

4. The ________ is a financial projection of the firm's short-term cash surpluses or shortages.

1. 1. capital assets journal
2. 2. strategic financial journal
3. 3. cash budget
4. 4. operating financial plan

5. Cash flows that result from debt and equity financing transactions, including incurrence and repayment of debt, cash inflows from the sale of stock, and cash outflows to pay cash dividends or repurchase stock are called

1. 1. operating flows.
2. 2. investment flows.
3. 3. financing flows.
4. 4. none of these.

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