Cash balance - The cash balance is your cash on hand. This includes what is in your checking accounts, savings accounts, petty cash and any other cash accounts that you might have.
• Cash sales - After arriving at a base figure of cash sales, it must be adjusted for any trade or other discounts and for possible returns. As stated previously, the base level of sales (and of accounts receivable) will be determined by the company’s projections, goals and past experience.
• Collections of accounts receivable - After a base level of accounts receivable is established
(based on sales projections), it must be adjusted to reflect the amount that will actually be paid during the time period. Typical adjustments for a small business might be to assume that 90 percent of accounts receivable will be collected in the quarter in which the sales occur, nine percent will be collected in the following quarter, and one percent will remain uncollectible. Of course, past experience will be the most reliable indicator for making these adjustments.
• Other income - Your cash position may be affected positively by income other than sales.
Perhaps there are investments, dividends, or a loan that will be introducing cash to the company during the time period. These types of cash sources are referred to as “other income.
• Raw materials (inventory) - For small business retailers and manufacturers, the largest cash expense is usually the amount spent for inventory or raw materials. Again, past experience will be your best indicator of future cash outlays. But don’t forget to factor in any necessary increases to keep up with projected sales. You may also want to consult with your suppliers as to whether any pricing changes are expected.
• Payroll - Salaries are commonly the second largest expense item during an accounting period.
Don’t forget to include