adjusted (adjective, ad-just-ed, \ əˈdʒəstəd \) net (adjective, net, \ net \) income (noun, in-come, \ ˈɪnkʌm \) approach (noun, ap-proach, \ əˈproʊtʃ \)
Definition: is a cash budgeting method that determines an organization’s cash flow by adjusting its net earnings on a cash basis. Such a method can be applied only in situations when a company’s net income is calculated for a period longer than half a year. This budgeting approach is used for a) estimating the firm’s cash needs at a future date, and b) finding out whether the company can acquire the needed funds by using its own means, or whether it has to borrow or raise them in the capital market. An alternative approach to cash budgeting is called “cash receipts and disbursements.”
In a Sentence:
- Currently, we can’t use the adjusted net income approach, since our financial statements only cover a period of four months. However, in two months time, we’ll be able to apply this method and get a more precise estimate of our cash requirements.
- Once Direct Invest implemented the adjusted net income approach, they gained more control over predicting their cash needs and making any necessary changes in the capital market.
Synonyms and related words: adjusted net income, annual adjusted net cash flow, net income, cash receipts and disbursements approach
