MANAGEMENT

Detailed explanation-1: -A company will use a cash budget to determine whether it has sufficient cash to continue operating over the given time frame. A cash budget will also provide a company with insight into its cash needs and any surpluses, which help it determine if the business is using cash effectively.

Detailed explanation-2: -Cash Budget Method: Under this method, all estimated/projected cash receipts (inflow) on a monthly basis is arranged in a tabular form and the monthly cash outflows are also similarly shown against each month.

Detailed explanation-3: -To calculate working capital, subtract a company’s current liabilities from its current assets. A positive amount of working capital means a company can meet its short-term liabilities and continue its day-to-day operations.

Detailed explanation-4: -Simplified Turnover Method is used to assess the working capital requirement of any borrower based on the turnover of the business. This method was originally suggested by the P.J. Nayak Committee for the Small Scale Industries in India in need of working capital from banks.