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Fluctuations in Cash Balances

What can be done to help smooth out major fluctuations in a firm's cash balances?

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For this the cash budget must be prepared. Cash budget will help in planning of inflows and outflows, which will help in smoothening the fluctuations. Properly preparing the cash budget will show how cash flows in and out of your business. Also, it may then be used in planning your short-term credit needs. In today's financial world, you are required by most financial institutions to prepare cash budgets before making capital expenditures for new assets as well as for expenditures associated with any ...

Solution Summary

The solution explains how to mitigate cash balance fluctuations.