Question

Sarah is the founder of a small business. At the start of the business year, she makes a list of all the possible expenses that the business might incur over the following year. She totals the expenses and spreads out the expenses evenly across the following 12 months. In the context of cash flow analysis, Sarah is determining the ___ for her business.

a. Net profit
b. Cash inflow
c. Depreciation
d. Monthly cash budget

Answer 1

Sarah is determining the Monthly cash budget for her business.

Step-by-step explanation:

In the context of cash flow analysis, Sarah is determining the Monthly cash budget for her business. A monthly cash budget is a projection of all the inflows and outflows of cash for a business in a given month. By spreading out the total expenses evenly across 12 months, Sarah is estimating how much cash her business will need to cover expenses each month throughout the year.