4 concepts
Reasons for Maintaining Cash on Hand
The main reason a business maintains cash on hand is to meet financial obligations.
Defining the Cash Flow Cycle
The cash flow cycle measures how long it takes for a firm to recover cash that it invests in ongoing operations.
Calculating the Cash Flow Cycle
Cash flow cycle = # days between disbursing cash and collecting cash in connection with undertaking a discrete unit of operations.
Components of the Cash Budget
The cash budget includes the beginning balance, detail on payments and receipts, and an ending balance.