Principles of Corporate Finance

Cash Budgeting

Example - Dynamic Mattress Company

Dynamic
cash budget

Net (sourcescash minusinflow uses) $46.5 $15.0 $26.0 $35.0

Total uses of cash 131.5 95.3 95.0 93.0

taxes, interest, & dividends 4.0 4.0 4.5 5.0

capital expenditures 32.5 1.3 5.5 8.0

labor and admin expenses 30.0 30.0 30.0 30.0

payment of AP 65.0 60.0 55.0 50.0

Uses of cash

Total Sources 85.0 80.3 121.0 128.0

other 0.0 0.0 12.5 0.0

collections on AR 85.0 80.3 108.5 128.0

Sources of cash

1st 2nd 3rd 4th

Qtr