Ending Cash

What Is Ending Cash?

Ending Cash represents the total amount of cash and cash equivalents a company has at the end of a reporting period, after considering all cash movements from operations, investing, and financing activities. It’s like checking your total available funds after everything that happened in the period.

What’s Included? 💼

Ending Cash includes:

• Cash Components:

  • Physical cash

  • Bank account balances

  • Money market accounts

  • Short-term investments (under 3 months)

  • Petty cash

• Cash Flow Categories:

  • Operating Activities:

    • Customer payments

    • Vendor payments

    • Employee payments

    • Tax payments

  • Investing Activities:

    • Asset purchases/sales

    • Investment acquisitions/disposals

    • Capital expenditures

  • Financing Activities:

    • Loan proceeds/payments

    • Stock issuance/buybacks

    • Dividend payments

👆 By the way, an interesting fact: Companies that went bankrupt despite showing profits often had healthy-looking accounts but low ending cash. That’s why financial experts say “Profit is an opinion, but cash is a fact!”

How to Calculate It

The comprehensive formula is:

Ending Cash = Beginning Cash

+ Operating Inflows – Operating Outflows

+ Investing Inflows – Investing Outflows

+ Financing Inflows – Financing Outflows

Real-world example: Starting Cash: $100,000

Operating Activities:

• Inflows: +$50,000 (customer payments)

• Outflows: -$30,000 (expenses paid)

Investing Activities:

• Inflows: +$20,000 (asset sale)

• Outflows: -$25,000 (new equipment)

Financing Activities:

• Inflows: +$40,000 (new loan)

• Outflows: -$15,000 (loan payment)

Ending Cash = $140,000

Why It Matters

Understanding ending cash is crucial for:

1. Planning future spending

2. Managing working capital

3. Meeting payment obligations

4. Making investment decisions

5. Evaluating liquidity

6. Measuring actual business performance

Managing Ending Cash

To maintain healthy ending cash:

1. Monitor all three cash flow categories

2. Time payments strategically

3. Speed up collections

4. Maintain cash buffers

5. Plan for seasonal variations

6. Set minimum thresholds