The definition of a datum is a fact used to make a conclusion or a point of reference in geography or geology. An example of a datum is a new scientific discovery used to reach a conclusion about the common cold.
How do you estimate minimum cash balance for the company? 2 ways I heard about are: 1) keep it equal to cash balance on B/S and 2) based on Net Working Capital. Is any of those methods preferred? Is there any other school of calculation that? And, if NWC method, then what exactly do you include in calculation (like include or excl.
The cash budget takes into account the beginning cash balance, the receipts from sales and the disbursements for any cash payments. The beginning balance plus the receipts gives us the total cash available. By subtracting the disbursements from the available cash, we can find the ending balance. One purpose of this exercise is to determine whether the monthly cash balances will be sufficient to maintain liquidity and to meet any requirements from the bank regarding minimum cash balances.