Principles of Corporate Finance

Cash Budgeting

Example - Dynamic Mattress Company

Dynamic short term financing requirements

$46.5 $61.5 $35.5 -$.5

minus caash at end of period)

required (minimum cash balance

Cumulative short term financing

Min operating cash balance 5 5 5 5

=Cash at end of period -41.5 -56.5 -30.5 +4.5

+Net cash flow -46.5 - 15 + 26 + 35

Cash at start of period 5 - 41.5 -56.5 -30.5