CASH BUDGET

I.DEFINICIN
The cash budget, also known as cash budget or cash flow, is one of the main
assumptions that are handled and processed in a company. The main purpose of
this document is to show the forecast or forecasts of future cash inflows and
outflows of a company.
The cash budget provides figures indicating the final cash balance; this can
determine whether in the future the company will face a deficit or a surplus of
cash. It also allows the company to schedule your short-term needs, to achieve
positive cash flows.
The cash budget should be developed taking into account range or a period of
time, that is, we can talk about budgets monthly, quarterly or even yearly cash.
On the other hand, the cash budget allows us to know the future scenario of a
project or business: whether the future project or business will be profitable
(when future revenues are higher than future expenses), or whether we will be
able to pay on time a debt.
Information we can present to third parties, for example, wanting to demonstrate
the profitability of future business (for example, to potential investors), or want to
show that we are able to timely pay a debt (for example, when applying for a loan
to any financial entity).

II.GOALS

We could say that the cash budget meets the following objectives:
or determine the position of the box from a company at the end of each period as
a result of planned operations.
Identify if there will be surpluses or deficits period cash and take corrective
action.
Establish whether there needs cash, and therefore funding sometime in the
period covered by the budget, or if there is availability of idle cash for investment.
Coordinate the cash handling company with other financial aspects, such as
costs or investments to get executed.
Finally, the cash flow budget aims to establish a solid foundation for the
continuous monitoring of the position of the box.

This budget is directly related to the sales budget and the budgets of charges, it is
therefore not surprising that often are documents produced at the same time or,

develop the latter once have clear total revenue estimates and expenses. Therefore,
it is often impossible to make a cash budget if you do not have these other updated
documents.
The result of cash budget can be a surplus cash or otherwise, a deficit thereof.

PRO-FORMA FINANCIAL STATEMENTS

I.DEFINICIN
The pro-forma or projected financial statements are the end product of the
process of financial planning of a company. The planning process is very
important within a company, regardless of size, and carry it out involves
considering the environment in which operations will be developed in the future
inflation rates, interest rates, market share, competition , economic growth, etc.
These financial statements show the behavior that will have the company in the
future in terms of funding needs, the behavioral effects of costs, expenses and
income, the impact of the financial cost, the results in terms of earnings, cash
generation and obtaining dividends.
It is important to note that the pro forma financial statements are the basis for
financial indicators prepared to make the financial evaluation of the project. The
financial statements are pro fundamental way: the income statement, cash flow
and balance sheet.
To properly perform the pro-forma financial statements must first develop
budgets, hence develop the flow later to make financial statements at a given
future date. For this it is necessary to have detailed budgets, such as:
Budget sales, production (for the cost), direct salaries, overhead, administrative
expenses, among others. Then for the cash flow is part of the cash budget.

II.ADVANTAGE
Determine future conditions of operations of the Company.
Prevents errors thereby can be significant savings in the company.
It improves the image of the companies, to financial institutions.
Provide information for decision-making of the company.
They support for better financial and economic analysis of the Company.

III.DISADVANTAGES
The Projected Financial Statements in times of inflation will be affected by the
declining purchasing power of the currency.