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Step.1: Depends on frequency and time period

Step.2: Develop a format

Step.3: It begins with existing cash balance than it identifies the sources of inflow and the
anticipated payment dates.

Step.4: Cash outflows to be taken into consideration i.e. fix overhead expenses and variable cost
of production and statutory dues.

Step.5: The difference between inflow and outflow enables a business to arrive at surplus or
deficit for the period.

4. Financial Management:
The main objectives of financial management is wealth maximization of shareholder’s wealth.
To ensure regular and adequate supply of funds to the concern.
To ensure adequate returns to the shareholders.
To ensure optimum funds utilization. Once the funds are procured, they should be utilized in
maximum possible way at least cost.

Financial planning: Management need to ensure that enough funding is available at the right
time to meet the needs of the business.
(а) The short term funding may be needed to invest in equipment and stocks, pay employees
and fund sales made on credit.
(b) The medium and long term funding may be required for significant additions to the
productive capacity of the business or to make acquisitions.

Financial control: It ensures that the business is meeting its goals and objectives. Financial
control addresses questions such as:
(a) Are assets being used efficiently?
(b) Are the business assets secure?
(c) Does management act in the best interest of shareholders and in accordance with business
rules?
Financial decision-making: The key aspects of financial decision-making relate to investment,
financing and dividends. For example, it is possible to raise finance from selling new shares,
borrowing from banks or taking credit from suppliers.
(a) A key financing decision is whether profits earned by the business should be retained or
distributed to shareholders through dividends.
(b) If dividends are too high, the business may be starved of funding to reinvest in growing
revenues and profits further.