A budgeted cash flow statement estimates a business's future cash inflows and outflows over a period. It shows expected cash receipts from operating, investing, and financing activities, as well as expected cash payments. The statement also tracks the estimated future bank balance. Operating activities relate to day-to-day business operations, investing activities relate to purchases and sales of non-current assets, and financing activities relate to obtaining and repaying loans and capital contributions.

1. 21.2
THE BUDGETED CASH
FLOW STATEMENT

2. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
 A Budgeted Cash Flow Statement looks at the future cash inflows
and future cash outflows of a business by showing:
 Estimated future cash receipts
 Estimated future cash payments
 Estimated future bank balance
21.2 BUDGETED CASH FLOW STATEMENT
Budgeted Cash
Flow Statement
Operating
Activities
Investing
Activities+ Financing
Activities+

3. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
 Typical cash items included in a Budgeted Cash Flow Statement:
Inflows/Receipts Outflows/Payments
Operating Activities
Cash flows from the provision of
goods and services in the day-to-
day operations of the business
Investing Activities
Cash flows from the buying and
selling of non-current assets
Financing Activities
Cash flows from changes in the
firm’s financial structure
Cash sales Payments to creditors
Collections from debtors
GST collected
Other revenue, e.g. interest
Stock purchases
Expenses paid
GST paid
Sales of non-current assets Purchases of non-current assets
Loans Loan repayments
Capital contribution Drawings of cash
21.2 BUDGETED CASH FLOW STATEMENT

4. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Budgeted Cash Flow Statement for the year ended 31 December 2015
$ $
Budgeted Cash Flow Statement for the year ended 31 December 2015
$ $
Cash Flows from Operating Activities
Cash sales 5030
Collections from debtors 5280
GST collected 503
Payments to creditors (2300)
Cash purchases of stock (2200)
GST paid (747)
Advertising (400)
Wages (2000)
Insurance (370)
Budgeted Cash Flow Statement for the year ended 31 December 2015
$ $
Cash Flows from Operating Activities
Cash sales 5030
Collections from debtors 5280
GST collected 503
Payments to creditors (2300)
Cash purchases of stock (2200)
GST paid (747)
Advertising (400)
Wages (2000)
Insurance (370)
Net Cash Flow from Operating Activities 2796
Budgeted Cash Flow Statement for the year ended 31 December 2015
$ $
Cash Flows from Operating Activities
Cash sales 5030
Collections from debtors 5280
GST collected 503
Payments to creditors (2300)
Cash purchases of stock (2200)
GST paid (747)
Advertising (400)
Wages (2000)
Insurance (370)
Net Cash Flow from Operating Activities 2796
Cash Flows from Investing Activities
Sale of computer 1600
Purchase of equipment (4500)
Budgeted Cash Flow Statement for the year ended 31 December 2015
$ $
Cash Flows from Operating Activities
Cash sales 5030
Collections from debtors 5280
GST collected 503
Payments to creditors (2300)
Cash purchases of stock (2200)
GST paid (747)
Advertising (400)
Wages (2000)
Insurance (370)
Net Cash Flow from Operating Activities 2796
Cash Flows from Investing Activities
Sale of computer 1600
Purchase of equipment (4500)
Net Cash Flow from Investing Activities (2900)
Budgeted Cash Flow Statement for the year ended 31 December 2015
$ $
Cash Flows from Operating Activities
Cash sales 5030
Collections from debtors 5280
GST collected 503
Payments to creditors (2300)
Cash purchases of stock (2200)
GST paid (747)
Advertising (400)
Wages (2000)
Insurance (370)
Net Cash Flow from Operating Activities 2796
Cash Flows from Investing Activities
Sale of computer 1600
Purchase of equipment (4500)
Net Cash Flow from Investing Activities (2900)
Cash Flows from Financing Activities
Capital contribution 8000
Loan – NAB 9000
Drawings (1350)
Loan repayment (200)
Budgeted Cash Flow Statement for the year ended 31 December 2015
$ $
Cash Flows from Operating Activities
Cash sales 5030
Collections from debtors 5280
GST collected 503
Payments to creditors (2300)
Cash purchases of stock (2200)
GST paid (747)
Advertising (400)
Wages (2000)
Insurance (370)
Net Cash Flow from Operating Activities 2796
Cash Flows from Investing Activities
Sale of computer 1600
Purchase of equipment (4500)
Net Cash Flow from Investing Activities (2900)
Cash Flows from Financing Activities
Capital contribution 8000
Loan – NAB 9000
Drawings (1350)
Loan repayment (200)
Net Cash Flow from Financing Activities 15450
Budgeted Cash Flow Statement for the year ended 31 December 2015
$ $
Cash Flows from Operating Activities
Cash sales 5030
Collections from debtors 5280
GST collected 503
Payments to creditors (2300)
Cash purchases of stock (2200)
GST paid (747)
Advertising (400)
Wages (2000)
Insurance (370)
Net Cash Flow from Operating Activities 2796
Cash Flows from Investing Activities
Sale of computer 1600
Purchase of equipment (4500)
Net Cash Flow from Investing Activities (2900)
Cash Flows from Financing Activities
Capital contribution 8000
Loan – NAB 9000
Drawings (1350)
Loan repayment (200)
Net Cash Flow from Financing Activities 15450
Net increase (decrease) in cash held 15346
Budgeted Cash Flow Statement for the year ended 31 December 2015
$ $
Cash Flows from Operating Activities
Cash sales 5030
Collections from debtors 5280
GST collected 503
Payments to creditors (2300)
Cash purchases of stock (2200)
GST paid (747)
Advertising (400)
Wages (2000)
Insurance (370)
Net Cash Flow from Operating Activities 2796
Cash Flows from Investing Activities
Sale of computer 1600
Purchase of equipment (4500)
Net Cash Flow from Investing Activities (2900)
Cash Flows from Financing Activities
Capital contribution 8000
Loan – NAB 9000
Drawings (1350)
Loan repayment (200)
Net Cash Flow from Financing Activities 15450
Net increase (decrease) in cash held 15346
Cash at beginning of period 2510
Budgeted Cash Flow Statement for the year ended 31 December 2015
$ $
Cash Flows from Operating Activities
Cash sales 5030
Collections from debtors 5280
GST collected 503
Payments to creditors (2300)
Cash purchases of stock (2200)
GST paid (747)
Advertising (400)
Wages (2000)
Insurance (370)
Net Cash Flow from Operating Activities 2796
Cash Flows from Investing Activities
Sale of computer 1600
Purchase of equipment (4500)
Net Cash Flow from Investing Activities (2900)
Cash Flows from Financing Activities
Capital contribution 8000
Loan – NAB 9000
Drawings (1350)
Loan repayment (200)
Net Cash Flow from Financing Activities 15450
Net increase (decrease) in cash held 15346
Cash at beginning of period 2510
Cash at end of period 17856
21.2 BUDGETED CASH FLOW STATEMENT

5. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Cash Balance
Operating
Investing
Financing
Operating
Investing
Financing
Operating
Investing
Financing
Operating
Investing
Financing
Operating
Investing
Financing
Operating
Investing
Financing
Operating
Investing
Financing
Operating
Investing
Financing
Operating
Investing
Financing
Operating
Investing
Financing
Operating
Investing
Financing
Operating
Investing
Financing
Operating
Investing
Financing
Operating
Investing
Financing
Cash Inflows
Money comes into
the business from
3 sources
Cash comes in from
selling goods and
services:
• Cash sales
• Debtor collections
• GST received
Cash comes in from
selling Non-Current
Assets:
• Property
• Vehicles
• Equipment
Cash comes in from
• Borrowings (loans)
• Capital contributions
Cash is spent on
running the business on
a daily basis
• Wages
• Creditor payments
• Stock purchases
• Expenses paid
Cash is spent on buying
Non-Current Assets
• Property
• Vehicles
• Equipment
Cash is spent on
• Loan repayments
• Drawings
Cash Outflows
Money leaves the
business in 3 ways
21.2 BUDGETED CASH FLOW STATEMENT

6. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Net Cash Inflow Net Cash Outflow
Operating
Activities
Investing
Activities
Financing
Activities
The business has been
able to generate net
cash from its day-to-day
operations
This can be spent on:
• Buying non-current
assets
• Loan repayments
• Drawings
The business can’t
generate net cash from
its day-to-day operations
It will have to get money
from:
• Selling non-current
assets
• Borrowing money
• Capital contributions
The business has
generated cash by
selling non-current
assets
This is good because it
may have sold
unproductive assets
But this is also bad as it
is not sustainable
because:
• The assets sold won’t
generate future cash
• The firm will run out
of assets to sell
The business has spent
money on non-current
assets
This is good because
these will be used to
generate future
revenues and cash
The business has raised
money from:
• Borrowing from
banks
• Capital contributions
from the owner(s)
This is not sustainable
because:
• The firm has
increased its debt
• Loans must be repaid
with interest
• The owner(s) can’t
continue to make
capital contributions
The business has spent
money on:
• Repaying loans to the
bank
• Drawings to the
owner(s)
This is good because:
• The firm has reduced
its debt
• Interest expenses will
be lower
• The owner’s have
made money from
the business
21.2 BUDGETED CASH FLOW STATEMENT

7. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
Ideally…
21.2 BUDGETED CASH FLOW STATEMENT
Cash Balance
Operating
Investing
Financing
Operating
Investing
Financing
OPERATING
ACTIVITIES
INVESTING
ACTIVITIES
FINANCING
ACTIVITIES
100,000
(60,000)
(20,000)

8. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
21.2 BUDGETED CASH FLOW STATEMENT
Cash Balance
Operating
Investing
Financing
Operating
Investing
Financing
OPERATING
ACTIVITIES
INVESTING
ACTIVITIES
FINANCING
ACTIVITIES
100,000
(130,000)
40,000
What about?…

9. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
21.2 BUDGETED CASH FLOW STATEMENT
Cash Balance
Operating
Investing
Financing
Operating
Investing
Financing
OPERATING
ACTIVITIES
INVESTING
ACTIVITIES
FINANCING
ACTIVITIES
100,000
(130,000)
40,000
What about?…

10. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
21.2 BUDGETED CASH FLOW STATEMENT
Cash Balance
Operating
Investing
Financing
Operating
Investing
Financing
OPERATING
ACTIVITIES
FINANCING
ACTIVITIES
INVESTIING
ACTIVITIES
100,000
(150,000)
60,000
What about?...

11. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
21.2 BUDGETED CASH FLOW STATEMENT
What about?... Cash Balance
Operating
Investing
Financing
Operating
Investing
Financing
OPERATING
ACTIVITIES
FINANCING
ACTIVITIES
INVESTIING
ACTIVITIES
(50,000)
30,000
30,000

12. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
 The purpose of budgeting is to plan for the future so management can make
decisions (Relevance).
Budgeted Cash Flow Statement for the year
ended 31 December 2015
$ $
Net increase (decrease) in cash held
Cash at beginning of period
Cash at end of period
Budgeted Cash Flow Statement for the year
ended 31 December 2015
$ $
Net increase (decrease) in cash held
Cash at beginning of period
Cash at end of period
Expected surplus of cash Expected shortage of cash
Budgeted Cash Flow Statement for the year
ended 31 December 2015
$ $
Net increase (decrease) in cash held 20000
Cash at beginning of period
Cash at end of period
Budgeted Cash Flow Statement for the year
ended 31 December 2015
$ $
Net increase (decrease) in cash held 20000
Cash at beginning of period 15000
Cash at end of period
Budgeted Cash Flow Statement for the year
ended 31 December 2015
$ $
Net increase (decrease) in cash held 20000
Cash at beginning of period 15000
Cash at end of period 35000
Budgeted Cash Flow Statement for the year
ended 31 December 2015
$ $
Net increase (decrease) in cash held (40000)
Cash at beginning of period
Cash at end of period
Budgeted Cash Flow Statement for the year
ended 31 December 2015
$ $
Net increase (decrease) in cash held (40000)
Cash at beginning of period 5000
Cash at end of period
Budgeted Cash Flow Statement for the year
ended 31 December 2015
$ $
Net increase (decrease) in cash held (40000)
Cash at beginning of period 5000
Cash at end of period (35000)
Decisions to plan for… Decisions to plan for…
Purchase non-current assets Contribute capital
Purchase stock in bulk (discounts)
Repay debts, e.g. loans, creditors
Make drawings
Get a loan from a bank
Defer planned asset purchases
Defer payments to creditors
Extend the firm’s overdraft
21.2 BUDGETED CASH FLOW STATEMENT

13. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
TASK
In-class Homework
SQ5 X
SQ7 X