ORGA-330 Lecture Notes - Lecture 5: Fixed Asset
25 Mar 2016
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Only cash payments and receipts appear on cash budget. As depreciaion is a noncash charge, it is not explicitly included in cash budget. However, depreciaion does afect taxes, which do appear in the cash budget. Cash budget issue: other potenial cash inlows in addiion to. Interest earned: add line in the collecions secion. Interest paid: add line in the payments secion. Found as interest rate x surplus/loan line of cash budget for preceding month. Note: interest on any other debt would need to be incorporated as well. Collecions would be reduced by the amount of bad debt losses. For example, if the irm had 3% bad debt losses, collecions would total only 97% of sales.
