Page 49 - IMDR MSME BOOK 2021

Managing Finance in Micro, Small & Medium Enterprises
It is also found that in most cases an average growth rate
per year during last three years has remained between
10%-25% in case of Sales, Net prot before tax, Net prot
after tax and Capital.
Cash Management
Cash budgeting should ensure that rm’s expenditures
should be matched with planned cash ows. Cash
budgets are generally used to assess whether a company
has an adequate amount of cash to uphold regular
operations. It can also be used to determine whether
rm’s excessive cash is being spent in unproductive
ways. By creating a cash budget - wherein a company
develops a summary of the anticipated revenues,
operating expenditures, sale and purchase of assets, and
admission or settlement of debt – it is possible to
conclude when more cash resources are required, as well
as when there will be an excess of cash.
This budget considers all the possible sources from
where the rm can receive cash over the budget period.
These sources include cash sales, cash to be received
against accounts receivables, cash to be generated from
the sale of an asset over the period, cash to be earned
from the sale of securities, or any other similar source.
The cash balance at the beginning of the budget period
will add up to the total cash inow to give the total cash
with the rm over the period.
The cash budget will also consider all the possible cash
outows during the budget period. These cash outows
will include all the cash payments made for purchases of
raw materials, inputs or semi-nished products,
consumables, any cash to be paid for the purchase of a
xed asset during the period, provisions for repairs and
maintenance, payments to labour, selling and
administrative expenses, printing, and stationery