The cash budget helps managers determine whether or not the company requires financing in a given month.

Question

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The cash budget is a tool used by managers to forecast the company's cash inflows and outflows for a specific period of time, typically a month. By comparing the expected cash inflows with the expected cash outflows, managers can determine the company's expected cash balance at the end of the period. If the expected ending cash balance is negative, it means the company will have a cash shortfall and may require financing to cover its expenses. Therefore, the cash budget helps managers determine whether or not the company requires financing in a given month.

The Cash Budget Helps Managers Determine Whether or Not the Company