Budgeted Cash Flow Statement

Cash Flow Statement is the financial statement that summarizes the amount of cash flow in or flows out of the company over a period of time. The cash flow mainly through three activities which are operating activities, investing, and financing activities. Operating activities are the main business activities that generate revenue for the company. Investing is the activities related to new investment, purchasing new fixed assets to expand business, and other financial instruments.  Financing is the activities related to borrowing or paid off the loan to the creditor.

Budgeted Cash Flow Statement is the estimation of cash inflow and outflow in the upcoming year. It is the cash flow statement for the future period. It is very important to know how much cash will flow in and out of the company. If there is not enough cash to operate, management should start to action such as make a loan or raise more capital before it is too late.

Managing cash flow is very important, it allows the company to prepare for the expansion and increase operation. It may not be accurate as of the budget, but it will be a broad guide for the company to follow. Budget cash flow will ensure that enough cash available to support business activities. It also that surplus cash will be invested to earn extra profit for the company.

Preparation Budgeted Cash Flow Statement

It is no different from a normal cash flow statement, the budgeted cash flow statement will focus on the three activities as following:

  • Operating Activities: It estimates all cash in and out from the business operation. Cash inflow from operating is mainly the cash generate from the sale of goods or services. It usually consistent with the sale budget exclude the credit sale if it is significant. The cash outflow from operating activities is the cash spend on cost of goods sold and operating expenses exclude the non-cash expense such as depreciation. We can summarize the cash from operating by taking the budgeted net income plus non-cash expenses and adjust with change in working capital. We will be able to get the expected net cash flow from operating activities.
  • Investing Activities: It the cash in and out due to the investment in long-term assets. The company may plan to invest in new fixed assets, financial instruments, associates, and other long-term assets. These will be the budgeted cash outflow, while cash inflow if company plan to sell this type of asset.
  • Financing Activities: Expected Cash inflow is the loan or debt security which company expected to be approved or issue in the upcoming year. The expected cash, the outflow is easy to calculate by simply sum up all the loan repayment schedules and bond payable. The withdraw and the issue of new capital also fall into this category.


Budgeted Cash Flow Statement is one of the budgeted financial statements, and it also links with other reports such as income statements and balance sheets. The operating activities cash flow will result from the budgeted income statement. Any change in investing and financing activities will result in to change in balance sheet. So it should be prepared carefully, otherwise, it will be mixed around.

Whatever the reasons, the cash balance at the end of budgeted cash flow must be positive. If it is negative, it means the company will not have enough cash to operate in the upcoming year. We need to find a new source of cash by seeking a new source of capital from the loan, bonds, or issue new shares, so it will impact the financing activities. One more, we can revise the investing activities by reducing or delaying the investment plan. These are the management decisions that depend on the actual and business sense.