disbursement

(noun)

Money paid out or spent.

Examples of disbursement in the following topics:

  • Managing Disbursements

    • How a company manages various disbursements and current assets can have a significant impact on its cash flows.
    • How a company manages various disbursements and current assets can have a significant impact on its cash flows.

  • Payments

    • The cash disbursement cycle is important to consider when analyzing cash payments.
    • A company's objective regarding the cash disbursement cycle should be to increase the cycle time, or delay making payments until they are due.
    • This will increase the mail time, or mail float, within the disbursement cycle.
    • Disbursing checks from a remote bank.
    • This is an example of a paystub to an employee, one of the most significant cash disbursements necessary for a company.

  • Calculating the Cash Flow Cycle

    • Cash flow cycle = # days between disbursing cash and collecting cash in connection with undertaking a discrete unit of operations.
    • CCC=# days between disbursing cash and collecting cash in connection with undertaking a discrete unit of operations.
    • The Cash Conversion Cycle emerges as interval C→D (i.e., disbursing cash→collecting cash).
    • The payables conversion period (or "Days payables outstanding") emerges as interval A→C (i.e., owing cash→disbursing cash)

  • Defining the Cash Flow Cycle

    • The cash conversion cycle refers to the time frame between a firm's cash disbursement and cash collection.
    • Disbursing cash to satisfy the accounts payable created by purchase of inventory; and
    • For a cash-only firm, the equation would only need data from sales operations (e.g., changes in inventory), because disbursing cash would be directly measurable as purchase of inventory, and collecting cash would be directly measurable as sale of inventory.

  • Managing Float

    • When managing cash disbursements, a company should endeavor to increase the amount of time present in the disbursement cycle.
    • Some methods for accomplishing this include mailing checks far away from those waiting to receive payment, disbursing checks from a remote bank, or purchasing with credit cards.

  • The Forecast Budget

    • These activities include billing customers as quickly as possible, disbursing payments only when they come due, collecting cash on overdue accounts, and investing idle cash.
    • Precautionary measures: A company needs to maintain cash for unexpected disbursements.
    • A typical cash flow forecast will include: cash on hand, expected receipts, and expected disbursements.
    • The direct method of cash flow forecasting schedules the company's cash receipts and disbursements (R&D).

  • Present Value, Multiple Flows

    • The new product will have start-up expenditures, operational expenditures, and then it will have associated incoming cash receipts (sales) and disbursements (Cash paid for materials, supplies, direct labor, maintenance, repairs, and direct overhead) over 12 years.
    • This project will have an immediate (t=0) cash outflow of 100,000 (which might include all cash paid for the machinery, transportation-in and set-up expenditures, and initial employee training disbursements. ) The annual net cash flow (receipts less disbursements) from this new line for years 1-12 is forecast as follows: -54672, -39161, 3054, 7128, 25927, 28838, 46088, 77076, 46726, 76852, 132332, 166047, reflecting two years of running deficits as experience and sales are built up, with net cash receipts forecast positive after that.

  • The Goals of Capital Budgeting

    • Preferred stock have no financial risk but dividends, including all in arrears, must be paid to the preferred stockholders before any cash disbursements can be made to common stockholders; they generally have interest rates higher than those of corporate bonds.