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How do tax and dividend payments feature in the cash budget? How does inventory purchasing policy affect the cash budget? What actions can improve the cash position shown in a cash budget? How do you treat capital receipts (asset sales, share issues) in the cash budget? How do you incorporate seasonality into a cash budget? What is the role of a minimum cash balance (buffer) in cash budgeting? How do you build sensitivity/scenarios into a cash forecast? How do you model a debtors/receivables collection profile with multiple months? How do you build a 13-week cash flow forecast and why is it used? How do you reconcile the cash budget to the budgeted balance sheet?
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What is the difference between the receipts-and-payments method and the adjusted-profit method of cash forecasting?

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Answer

The receipts-and-payments method builds the cash forecast directly from expected cash inflows and outflows (as in a detailed cash budget)—precise and short-term. The adjusted-profit (indirect) method starts from budgeted profit and adjusts for non-cash items (depreciation) and working-capital changes—useful for longer-term or summary forecasts, mirroring the indirect cash flow statement.
Real-world example For the annual plan, the team derives cash from budgeted profit plus depreciation and working-capital changes.

Common follow-ups: Which method suits short-term detail? | How does the adjusted-profit method work?

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All 34 Cash Budgeting questions