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Understanding Cash Budgets. A cash budget is used to estimate the cash inflows and cash outflows anticipated by a company over a period of time. Budgets are often looked at over a 1-month, 3-month or 12-month time period.
A budget is defined as management's quantitative expression of plans for aforthcoming period. Budgets are prepared at various levels of an organiza-tion. The master budget is defined as the overall financial plan for the period,which reflects the organization's goals and objectives. The master budgetincludes operating and financial budgets. Operating budgets show the com-pany's planned sales and operating expenses.