As a financial manager, Lisa wants to know when her firm will need to arrange for shortterm financing and when the firm is likely to have surplus cash available to pay off loans or to invest in shortterm liquid assets. These concerns suggest that Lisa would want to develop a:
A) cash budget.
B) pro forma income statement.
C) sales forecast.
D) projected balance sheet.

Question

As a financial manager, Lisa wants to know when her firm will need to arrange for short­term financing and when the firm is likely to have surplus cash available to pay off loans or to invest in short­term liquid assets. These concerns suggest that Lisa would want to develop a:
A) cash budget.
B) pro forma income statement.
C) sales forecast.
D) projected balance sheet.

Quizplus · Accepted Answer

A cash budget would allow Lisa to forecast the firm's cash inflows and outflows over a specific period of time, which would enable her to determine when the firm will need short-term financing and when it will have surplus cash available. A pro forma income statement would help Lisa forecast the firm's revenues, expenses, and profits, but it would not provide information about cash flows, which is critical when managing short-term financing. A sales forecast and a projected balance sheet could be useful for long-term planning, but they would not provide the specific information that Lisa needs to manage short-term financing.

As a Financial Manager, Lisa Wants to Know When Her