The cash budget is the primary short-term financial planning tool. The key reason(s)that a treasurer creates a cash budget is (are)
I.to estimate the firm's investment in assets;
II.to estimate the size and timing of the firm's new cash flows;
III.to prepare for potential financing needs

Question

Quizplus · Accepted Answer

The cash budget is primarily used to estimate the size and timing of a firm's new cash flows, as well as preparing for potential financing needs. It is not used for estimating a firm's investment in assets, as that falls under capital budgeting. Therefore, II and III are the correct options.

The Cash Budget Is the Primary Short-Term Financial Planning Tool