As the typical cash budget shows cash flows only on a monthly basis, the information provided by the cash budget is not necessarily adequate for ensuring solvency.

Question

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While the cash budget is useful in projecting cash inflows and outflows on a monthly basis, it may not provide a comprehensive picture of a company's solvency. This is because solvency involves long-term viability and may require additional analysis of factors such as debt levels, revenue sources, and capital expenditures.

As the Typical Cash Budget Shows Cash Flows Only on a Monthly