CONSTRUCTING A CASH BUDGET AND PROJECTING FINANCIAL STATEMENTS: AN EXERCISE OF SHORT-TERM FINANCIAL PLANNING FOR ENTREPRENEURS

Hsin-hui I.H. Whited

Review of Business and Finance Studies, 2014, vol. 5, issue 1, 99-112

Abstract: This case presents a teaching tool that equips students with an essential skill of short-term financial planning for entrepreneurs. Short-term financial planning concentrates on a venture’s cash needs, the lifeblood of an entrepreneurial venture, so these ventures can better survive the early stages of operations. In this case, students are required to build up a cash budget by utilizing payment schedules of sales, inventory purchases and wage-and-commissions. Other tasks demanded by this challenging case include projecting the following: monthly income statements, balance sheets and statements of cash flows over a four-month period. Students who take on this case should possess a solid understanding of the interrelationship among income statements, balance sheets and statements of cash flows. This case is suitable for a graduate-level finance course or an upper-level undergraduate class of entrepreneurship in either finance or accounting departments. Students might be assigned to work individually or in groups on this case. Completion of the case requires 10-15 hours outside of class. Class discussion should be about 2-3 hours.

Keywords: Entrepreneurial Finance; Cash Budget; Financial Statements (search for similar items in EconPapers)
JEL-codes: M13 M41 (search for similar items in EconPapers)
Date: 2014
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