Question

I. What is the importance of Cash Budgets to financial planning? Provide an example if possible.

II. Describe the “five Cs of credit” used in evaluating creditworthiness?

Answer 1

1. Importance of cash budget to the financial planning is immense because cash budget are always helpful in determination of the overall cash flows with regards to the future of the company and these futuristic cash flows are always considered in order to help the organisation in its financial planning because financial planning is a futuristic process involving allocation of various incomes and expenses of an organisation into various products which will help the organisation to attain its objectives.

Cash budget is the budget which will allocate all the cash available to the company into various kinds of project which will help the organisation in attainment of its goals and then this cash budgets are always meant as a standards, and then the actual performance to these budgets are compared, and then the deviation are always worked upon in order to better the performance of the company and achieve the goals in the long run