EBK FOUNDATIONS OF FINANCE
10th Edition
ISBN: 9780134897288
Author: PETTY
Publisher: VST
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Chapter 14, Problem 4RQ
Summary Introduction
To discuss: Reasons whether the firm needs cash budget or not when it has excess cash on hand.
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Why is the cash budget regarded as a primary tool in short-run financial
planning? Discuss.
A cash budget is usually thought of as a means of planning for future financing needs. Why would a cash budget also be important for a firm that has excess cash on hand? Explain.
Explain why many companies believe that cash flow budgeting is important.
Chapter 14 Solutions
EBK FOUNDATIONS OF FINANCE
Ch. 14 - Prob. 1RQCh. 14 - Discuss the shortcomings of the percent of sales...Ch. 14 - Prob. 3RQCh. 14 - Prob. 4RQCh. 14 - Prob. 1SPCh. 14 - Prob. 2SPCh. 14 - (Financial forecastingdiscretionary financing...Ch. 14 - (Financial forecastingpercent of sales) Next years...Ch. 14 - Prob. 5SPCh. 14 - (Percent of sales forecasting) Which of the...
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- If management is being evaluated on their ability to manage a budget, what can they do to increase cash flow?arrow_forwardWhich statement about the cash budget is correct? It is also called the statement of cash flows. It can show managers when the company will experience a net loss. It can indicate when sales are insufficient. It can show managers when additional financing will be necessary.arrow_forward1. What is the difference between strategic and operational plans?2. What is the purpose of financial plans?3. What are the component of an operations plans?4. What are the pro forma financial statements?5. What is the percentage of sales forecasting method? What are some of the limitations financial analysis should be aware of in applying this method?6. What is a cash budget? What are the usual steps involved in preparing a cash budget?7. Explain the difference between deterministic and probabilistic financial planning models.arrow_forward
- A very important role of the cash budget is to a. Determine how to finance dividend payments b. Plan for appropriate financing needs c. Determine the optimal source of financing for the organization’s operations d. Help identify credit customers who might not payarrow_forwardA very important role of the cash budget is to Determine how to finance dividend payments Plan for appropriate financing needs Determine the optimal source of financing for the organization’s operations Help identify credit customers who might not payarrow_forwardIt’s a general saying that Companies having proper management of “Future Cash Budgeting” are enjoying more financial soundness. If yes, justify with examples?arrow_forward
- What is a cash budget, and how is this statementused by a business? How is the cash budget affected by the CCC? By credit policy?arrow_forwardexplain to me how would a cash budget relate to the breakeven analysis. What would a banker or investor look for in these documents.arrow_forwardBudgeting is essential to businesses, but it is not that simple to implement. What are some challenges and weaknesses that a firm may find in the budgeting process?arrow_forward
- Explain why it would be beneficial to prepare a cash forecast, or a cash budget, for an organization. Share the best practices you would implement when budgeting for an organization.arrow_forwardExplain statement of cash flows proforma and its significance in budgeting. Provide a hypothetical example of a statement of cash flows in a manufacturing enterprise.arrow_forwardExplain the advantages and disadvantages of corporate cash budgeting.arrow_forward
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