What is a cash budget and how may it help with business operations?
What is a cash budget and how may it help with business operations?
Homework Answers
Solution:
Cash Budget:
A cash budget is an projection of the cash flows (Inflow and outflow) for a business over a specific period of time. Cash budget is used to assess whether the entity has sufficient cash to operate.
Cash budget helps business operations by ensuring availability of cash at time of need. Further It can also be used to determine whether too much of a company’s cash is being spent in unproductive ways. It will help business in controlling the unproductive expense.
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