Managerial finance and accounting Essay Example | Topics and Well Written Essays - 1500 words

Managerial finance and accounting - Essay Example(Besley and Brigham 2000). If the capital reckon shows that a faithful has excess funds it needs to catch up with its short term debts that excess interchange can be invested and interest or dividend income can be earned. On the other hand, if the change budget shows more cash disbursals and less cash inflow, the deficit has to be covered by borrowing the shortfall of cash to pay short term expenses (Daft 2003).The following report is aimed at analyzing the budgeting process and includes the cash budget of Sungsun Company as it is chief(prenominal) for a company to know about its future cash balances. It is essential for a profligate to determine the amount of cash in hand it should have at any time to look smooth business operations is uninterrupted. The following is the budgeting process that is used to make the cash budget Sungsun Company.The disbursement and receipts or scheduling method is used to make the cash budget. Each months cash disbursements and cash receipts are estimated and then the net cash flow is determined by subtracting cash disbursements from cash receipts. Negative net cash flow indicates there is an outflow of cash and positive net cash flow indicates that there is an inflow of cash. Sungsuns cash receipts include recompense receipt from debtors and disbursements include payment to creditors and payment of wages, administrative expenses and taxes. Budgeted sales are calculated keeping in mind seasonal fluctuations and other factors. Payment to creditors and debtors and administration expenses are budgeted keeping in mind the previous trends. The cash inflows and cash outflows in each month are then calculated and subtracted to obtain the net budgeted cashflow of each month.Cash budget is an extremely important component for proper management of cash for a rapidly expanding company such as Sungsun Company. It helps in planning investment and borrowing strategies for the effici ent use of cash which is extremely important for an expanding company as