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How does the capital budget integrate into the master budget? How do you model working capital changes in the master budget? How do you flex or revise the master budget during the year? How do you build a master budget model that recalculates automatically?
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How does the master budget reflect a change in credit terms offered to customers?

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Answer

Extending customer credit terms delays cash receipts (the cash budget shows lower near-term inflows and higher receivables), raising the receivables balance on the budgeted balance sheet and possibly requiring more financing, even though budgeted profit is unchanged. The master budget captures this timing effect across cash and the balance sheet.
Real-world example Moving customers from 30 to 60 days raises budgeted receivables and creates a cash-timing gap.

Common follow-ups: Does profit change? | Which statements are affected?

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All 34 The Master Budget questions