Which Statement About the Cash Budget Is Correct

question 47

Multiple Choice

Which statement about the cash budget is correct?

• A)It can show managers when additional financing will be necessary.
• B)It can show managers when the company will experience a net loss.
• C)It can indicate when sales are insufficient.
• D)It is also called the statement of cash flows.

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Definitions:

Cost of Capital

The minimum earnings rate required by a company on its investment endeavors to maintain market valuation and attract funding.

Budgetary Limit

The maximum amount of money allocated for a specific purpose in a budget.

IRRs

The Internal Rate of Return is the discount rate at which the net present value of all cash flows from a specific project is zero.

NPV

Net Present Value, a calculation used to determine the present value of a series of future cash flows by discounting them at a specific rate.