As a financial manager,Leonard wants to know when his firm will need to arrange for short-term financing and when the firm is likely to have surplus cash available to pay off loans or to invest in short-term liquid assets.These concerns suggest that Leonard would want to develop which of the following?
A)cash budget
B)projected balance sheet
C)pro forma income statement
D)sales forecast

Question

Quizplus · Accepted Answer

A cash budget is a schedule of expected cash receipts and disbursements, which helps in estimating when the firm will need short-term financing and when it will have surplus cash to pay off loans or invest in short-term liquid assets. It provides an estimate of the net cash flow for a specific period, which helps a financial manager like Leonard in planning and managing the firm's cash resources efficiently. Therefore, the best choice for Leonard to develop would be a cash budget. The other options listed, such as a projected balance sheet, pro forma income statement, and sales forecast, may provide relevant information, but are not as directly tied to Leonard's concerns about short-term financing and surplus cash.

As a Financial Manager,Leonard Wants to Know When His Firm