In forecasting a firm's cash needs for some future period:

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A cash budget approach can effectively deal with both level and seasonal production schedules by taking into account anticipated cash inflows and outflows, and adjusting for variations in production schedules and sales patterns. The percent-of-sales method, on the other hand, is a simplified approach that calculates cash needs based on a percentage of projected sales, without considering other factors that may impact cash flow. Cash budgets are generally considered more precise and reliable than the percent-of-sales method, as they take a more comprehensive and detailed approach to forecasting cash needs.

In Forecasting a Firm's Cash Needs for Some Future Period