Page 50 - IMDR MSME BOOK 2021

Managing Finance in Micro, Small & Medium Enterprises
requirements, dividend distribution, etc.
The cash balance forecast is calculated by ascertaining
the difference between total cash outows from the cash
inows over a period. It becomes the basis for taking
suitable investment decisions by the rm. The
management may decide to invest in xed assets or may
allocate the surplus funds to other functional areas
within the rm as per priority and requirement. If there is
a case of deciency, then the management may take
actions accordingly. The rm must look for other sources
of raising capital or to nd out the ways to control the
cost.

A cash budget is very important, especially for smaller
companies. It allows a company to establish the amount
of credit that it can extend to customers without having
problems with liquidity. A cash budget helps avoid a
shortage of cash during periods in which a company
encounters a high number of expenses. It is found that
out of 199 respondent rms 110 rms i.e., 55% have
prepared the monthly rolling cash budget for next one
year of operations.

To know the perception of the respondent business units
towards the usefulness of cash budgeting for the
organisation, the constructs have been identied and
obtained with the help of Five-point Likert scale with the
corresponding scores ranging from Strongly Agree (5) to
Strongly Disagree (1).
The usefulness of the cash budgeting for the MSMEs
cannot be underestimated. In the present study the
respondent rms have shown the degree of agreement in
accepting the usefulness of the cash budget based on the
different variables.

The majority (56%) of the respondent rms have shown
their agreement to the usefulness of cash budgeting in