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. Because of these concerns, which of the following should Leonard want to develop?
A) cash budget
B) projected balance sheet
C) pro forma income statement
D) sales forecast

Question

Quizplus · Accepted Answer

A cash budget is a financial tool that helps businesses forecast cash inflows and outflows over a specific period. It can help Leonard to determine when the firm will need short-term financing and when it is likely to have surplus cash available to pay off loans or invest in short-term liquid assets. The projected balance sheet, pro forma income statement, and sales forecast are all important financial statements, but they do not provide information about the timing of cash inflows and outflows.

As a Financial Manager, Leonard Wants to Know When His