... is also essential to budget - a balance sheet that includes information on debtors, creditors and cash flow. A Cash budget project is a future cash position month by month. If overdraft is projected to be close to or over limit, you need to take appropriate action. If you cannot, you may need to increase prices or ration sales to avoid the risk of bankruptcy through over trading. If cash position is extremely variable, you may need to analyse your cash flow into shorter time periods to see whether there is likely to be a problem at any point during a month. B Profit and loss budgets let to analyse projected margins and other key ratios. If margins are unsatisfactory, you may need to increase prices, reduce costs or focus on your most profitable lines. Growing businesses that are not yet profitable may find it useful to calculate the breakeven level of ...

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