Although a company is profitable liquidity can present problems because it depends on the development of collections and payments in lieu of income and expenses. Then, against the static analysis of liquidity through ratios, there is another option which is the study of dynamic collections and payments, and from them, funding requirements and anticipated cash balances.
The cash budget determines in advance the liquidity situation of the company and therefore able to anticipate possible problems and if necessary seek appropriate forms of funding.
The book Excel Input the summary budget, giving as output the excess or deficit, the financial needs and anticipated cash balances. Also analyzed the data graphically and calculated trends.
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