Two tools that are particularly useful in understanding the cash requirements of a business and in estimating how much financing a new business will require are the cash flow break-even analysis and the cash budget.

Question

Quizplus · Accepted Answer

The cash flow break-even analysis and the cash budget are both essential tools for understanding a business's cash requirements and estimating the amount of financing a new business will require. The cash flow break-even analysis helps to determine the level of sales required to cover all fixed and variable costs and to achieve a break-even point. On the other hand, the cash budget helps to estimate the business's future inflows and outflows of cash, enabling the owner to plan ahead and make informed financial decisions. Therefore, it is true that these two tools are particularly useful in understanding cash requirements and estimating financing needs.

Two Tools That Are Particularly Useful in Understanding the Cash