If the Cash Available Falls Below the Budgeted Balance

question 115

Multiple Choice

If the cash available falls below the budgeted balance:

• A) the company should reduce its cash receipts.
• B) the company can invest the excess.
• C) the company will need additional financing.
• D) the company is facing bankruptcy.

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Definitions:

Financed by Creditors

A phrase indicating that a portion of a company's funding or assets has been obtained through borrowing from lenders.

Total Assets

The sum of all owned resources (assets) that have economic value which a company or individual possesses.

Accounts Receivable Turnover

A financial metric that measures how efficiently a company collects revenue from its customers by comparing net credit sales to average accounts receivable.

Liquidity

A measure of how quickly and easily an asset can be converted into cash without significantly affecting its price.