FIN 5130 NSU Determine The Cash Surplus and Shortages

  1. Enter all cash coming in under Cash Inflows and enter all cash going out under Cash Disbursements (same as Cash Outflows)
  2. Bad debts is cash not collected. Cash inflows records all cash collections in that money, bad debts is cash not collected so it would not have a place in cash inflows. Cash outflows records all cash disbursements, cash has not gone out in that month so it would not have a place in cash outflows as well. Since bad debts means no cash transaction has occurred, you would simply ignore it when preparing the Cash Budget (so don’t do anything with it).
  3. Also think about depreciation expense – is it a cash expense or a non-cash expense? if it is a cash expense then record it under Cash Outflows. If it is a non-cash expense, then you would simply ignore it when preparing the Cash Budget because cash is not going out.
  4. To calculate the interest payments on company’s debt of $50,000, think about how we calculated semi-annual payments (under PMT) in the bond valuation chapter. We would take par value * coupon rate/2. You can think of par value here as $50,000.
  5. You need to show your working notes for credit. You must submit your work using excel files (with .xls or .xlsx for credit).
 
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