Final answer:
The Cash Budget is critically important to the survival of businesses as it tells managers how much cash they have available and how it will be used. It helps them make important financial decisions and maintain financial stability.
Step-by-step explanation:
The Cash Budget is critically important to the survival of businesses. It tells managers how much cash they have available at any given time and how that cash will be used.
By analyzing the cash budget, managers can make important financial decisions, such as whether to invest in new projects, hire additional employees, or reduce expenses. For example, if the cash budget reveals a surplus of cash, managers may choose to invest in marketing initiatives to attract new customers.
Ultimately, the cash budget is a tool that helps businesses maintain financial stability and plan for the future.