Cash budjet Essay Example | Topics and Well Written Essays - 500 words

Cash budjet - Essay Example The minimum line of credit is the amount of money that can be allocated and be made available whenever a client company needs it (Fabozzi & Peterson, 2003). BCM has shown that it needs $241,500 in the month of June. This should be the minimum line of credit from the spreadsheet. CBM’s cash position is quite strained especially in the first four months. CBM is forced to seek additional financing from outside. This is due to low cash receipts from debtors who have formed the main source of cash in the budget. The concern for the company is how to obtain extra external financing and what interest will be needed (Pineda, 2006). The cash budget also does not have a provision for repaying the short loan and interest. As a bank manager, I will not accept CBM as my client for some reasons. The first one is that CBM is a new venture which has not sold even one item and therefore the market is new. CBM needs a total of $415,250 just within the first four months. According to Bierck (2009) such an undertaking is risky since CBM does not have any historical figures which can give a clue of how much sales they can be able to generate The other point is that there is no reference for the sales forecast. I will only accept CBM once they have traded and have historical figures to rely in respect of the