Question

As a finance manager at Outdoor Adventure Sporting Goods, Roman worries about the firm's borrowing requirements for the upcoming year. He knows the benefit of estimating the company's cash disbursements and short-term investment expectations. Facing these concerns, a(n) ________ would provide Roman with valuable information by providing a good estimation of whether the firm will need to do short-term borrowing.

Answer 1

Answer:

cash flow budget

Explanation:

A cash budget estimates cash inflows and outflows (net cash flows) and is the basic tool for determining a company's borrowing needs, debt repayment, operating expenses, and short-term investments.

The difference between accounting and finance is that accounting relies on past events, while finance has to anticipate to future events. The basic and most important tool in finance is the cash flow budget. A company can have huge sales but if it doesn't enough cash to pay its expenses and debts, then it will not function properly.