Why is a cash budget important?

Question

Quizplus · Accepted Answer

A cash budget is important because it allows a company to forecast both their cash inflows and outflows, as well as the impact these inflows and outflows have on the firm's cash balances. This information is crucial for managing the company's cash flow, ensuring they have enough liquidity to pay bills and expenses, and making informed financial decisions. Cash sales are important to consider, but are just one piece of the overall cash inflows and outflows that need to be projected in a cash budget.

Why Is a Cash Budget Important