Final answer:
Kate, the financial manager at Flavors Inc., is creating a cash budget, which is designed to manage the company's cash flows by detailing anticipated cash receipts and expenditures, working capital, and the potential need for outside financing.
Step-by-step explanation:
Kate is currently working on the Operating budget. The operating budget is a financial plan that outlines the anticipated revenues and expenses of a company for a specific period, usually one year. It includes estimates for all operational activities, such as production, sales, and administrative costs. The operating budget is typically prepared after all other budgets, such as sales, production, and marketing budgets, have been completed.
Kate, as the financial manager at Flavors Inc., is working on the cash budget. This particular budget is prepared after all other budget estimates have been finalized and it exhibits the expected cash receipts, cash expenditures, the amount of working capital available, and the potential need for external financing. The cash budget assists in managing the company's cash flows by accounting for the timing of receipts and payments, ensuring that the company has adequate liquidity to meet its obligations.