How to assess the cash available to the business

The cash balances you have just calculated are only monthly results. To assess the cash available to the business, you have to add existing profits or deficits to the cash balance of the following month. This amount is the cash balance to carry forward, and in the next month's results is referred to as the cash balance brought forward. You will see that they are the same amount.

For example, in January, the cash balance to carry forward was £2,150, the same figure as the cash balance brought forward for February. Similarly, you can tell that the cash balance to carry forward for the previous December was £1,650.

This type of record helps managers to spot trends, and to plan the following months.