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Public finance

Public finance describes finance as related to sovereign states and sub-national entities (states/provinces, counties, municipalities, etc.) and related public entities (e.g. school districts) or agencies. It usually encompasses a long-term strategic perspective regarding investment decisions that affect public entities.[8] These long-term strategic periods usually encompass five or more years.[9] Public finance is primarily concerned with:

Identification of required expenditure of a public sector entity

Source(s) of that entity's revenue

The budgeting process

Debt issuance (municipal bonds) for public works projects

Central banks, such as the Federal Reserve System banks in the United States and Bank of England in the United Kingdom, are strong players in public finance, acting as lenders of last resort as well as strong influences on monetary and credit conditions in the economy.[10] [https://efinancemanagement.com/financial-management/public-finance Public finance is mainly a lot of receiving and spending money. One thing involved with public finance is the government spends money on resources that the majority uses. However, there is a chance that the government could exceed it's spending limits and turn to borrow from the public. In order to avoid borrowing money from the public, the budgeting plan gets made and it allows for spending guidance.]

Capital Main article: Financial capital Capital, in the financial sense, is the money that gives the business the power to buy goods to be used in the production of other goods or the offering of a service. (Capital has two types of sources, equity, and debt).

The deployment of capital is decided by the budget. This may include the objective of business, targets set, and results in financial terms, e.g., the target set for sale, resulting cost, growth, required investment to achieve the planned sales, and financing source for the investment.

A budget may be long term or short term. Long term budgets have a time horizon of 5–10 years giving a vision to the company; short term is an annual budget that is drawn to control and operate in that particular year.

Budgets will include proposed fixed asset requirements and how these expenditures will be financed. Capital budgets are often adjusted annually (done every year) and should be part of a longer-term Capital Improvements Plan.

A cash budget is also required. The working capital requirements of a business are monitored at all times to ensure that there are sufficient funds available to meet short-term expenses.

The cash budget is basically a detailed plan that shows all expected sources and uses of cash when it comes to spending it appropriately. The cash budget has the following six main sections:

Beginning cash balance – contains the last period's closing cash balance, in other words, the remaining cash of the last year. Cash collections – includes all expected cash receipts (all sources of cash for the period considered, mainly sales) Cash disbursements – lists all planned cash outflows for the period such as dividends, excluding interest payments on short-term loans, which appear in the financing section. All expenses that do not affect cash flow are excluded from this list (e.g. depreciation, amortization, etc.) Cash excess or deficiency – a function of the cash needs and cash available. Cash needs are determined by the total cash disbursements plus the minimum cash balance required by company policy. If the total cash available is less than cash needs, a deficiency exists. Financing – discloses the planned borrowings and repayments of those planned borrowings, including interest.