What are the similarities and differences between the cash budget and the cash flow statement?
Also question is, what is a cash flow budget and what is it used for?
A cash budget details a company's cash inflow and outflow during a specified budget period, such as a month, quarter or year. Its primary purpose is to provide the status of the company's cash position at any point of time.
Furthermore, what is the difference between cash and profit? Cash (often synonymous with revenue) refers to the amount of money currently or soon-to-be available. It is the money coming into the organization either from investors or direct business activity and serves as the resource to pay expenses. Profit is the amount of money left over after all expenses are paid.
Then, what is the difference between a cash flow statement and a cash flow forecast?
Difference between the cash flow statement and cash flow projection. A cash flow statement is an actual representation of transactions that has already taken place. A cash flow projection is a look into the future to predict what future cash flow will be.
What is the importance of a cash flow budget?
A cash budget is very important, especially for smaller companies. It allows a company to establish the amount of credit that it can extend to customers without having problems with liquidity. A cash budget helps avoid a shortage of cash during periods in which a company encounters a high number of expenses.