Calculation of Idle cash in case of Private limited company

Save Share

This query is : Resolved

Quick Summary

This discussion explains how to determine the idle cash available in a private limited company's bank accounts for investment in Fixed Deposits. The recommended approach involves preparing a monthly cash flow statement to identify surplus funds. A safety margin should be maintained, with the remaining balance suitable for medium to long-term FDs, while the safety margin can be used for short-term FDs or sweep accounts.

Deepak

Deepak (Querist)

24 April 2024 Dear Experts,

We have private limited company. We have two Bank Accounts. We dont have much investments. I want to calculate idle cash availability in bank accounts so that I can place FD. Please guide how to calculate idle cash.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

24 April 2024 Prepare a cash flow statement for the year.
It will identify surplus cash.

Nikhil Kaushik

Nikhil Kaushik (Expert)

25 April 2024 actually, you need to calculate cash flow on monthly basis. then provide a safety margin on top of that. the balance amount can be used to invest in medium-long term FDs. The safety margin can be invested in short term FDs/or do sweeps.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now