A cash budget identifies short-term fluctuations in cash flows, helping managers identify times when the firm might face cash flow problems-or when it might have extra cash that it could invest.

Question

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A cash budget is an essential tool for managing a company's short-term cash flows. By forecasting inflows and outflows of cash, managers can identify periods when the firm might face cash flow problems or when it might have extra cash available for investing. This makes it easier to plan for the future and ensure that the firm has sufficient liquidity to meet its obligations.

A Cash Budget Identifies Short-Term Fluctuations in Cash Flows, Helping