Calculation of Idle cash in case of Private limited company

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

Nikhil Kaushik

Nikhil Kaushik (Expert)
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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.

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