In a cash budget,if the cash available before financing falls below the budgeted balance:
A)the company should reduce its cash receipts.
B)the company can invest the excess cash.
C)the company will need additional financing.
D)the company is facing bankruptcy.

Question

Quizplus · Accepted Answer

If the cash available before financing falls below the budgeted balance, it means that the company does not have enough cash to cover its expenses and may face a cash shortage. In this case, the company will need additional financing to meet its obligations. This could be in the form of a loan, line of credit, or equity financing. The company should also re-evaluate its cash management practices and look for ways to improve its cash position. Reducing cash receipts or investing excess cash may not be enough to address the underlying cash flow issue. Bankruptcy is not necessarily the immediate outcome, but it could be a possibility if the company fails to address its cash flow problems in a timely and effective manner.

In a Cash Budget,if the Cash Available Before Financing Falls