From the course: Accounting Foundations: Budgeting
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Financing
- Okay, by combining expected cash inflows, and expected cash outflows, we've found our net cash position for each quarter as shown here. When we factor in our beginning cash balance of $25,000, we can see that we're going to be short for the first quarter by $11,875. We're going to need to borrow some money, if we're confident in our projections. And again, let me emphasize this point. We're going to need to borrow some money, but we don't need that money today. We know we're going to need it though, in the future. Now we have time to arrange for financing, rather than charging into the bank at the last minute, pleading for cash, we have time. Keep in mind also that our objective is not to have zero dollars available in cash. Companies will often identify a minimum cash balance that they desire to have, just in case things pop up. So let's assume that Brigham would like to have a minimum cash balance of $10,000, at the end of each quarter. As you can see here, that means we're going…
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