A cash budget is an estimation of the cash inflows and outflows of a business over a specific period of time, which can be weekly, monthly, quarterly, or annually. It is used to assess whether the entity has sufficient cash to continue operating over the given time frame and provides a company insight into its cash needs and any surpluses, which help it determine if the business is using cash effectively. A cash budget can be viewed as short-term cash budgets, usually, a time frame of weeks to months, or long-term cash budgets, which are viewed as years. The cash budget is comprised of two main areas, which are Sources of Cash and Uses of Cash. The Sources of Cash section contains the beginning cash balance, as well as cash receipts from cash sales, accounts receivable collections, and the sale of assets. The Uses of Cash section contains all planned cash expenditures, which comes from the direct material budget, direct labor budget, manufacturing overhead budget, and selling and administrative expense budget. It may also contain line items for fixed asset purchases and dividends to shareholders. If there are any unusually large cash balances indicated in the cash budget, these balances are dealt with in the financing budget, where suitable investments are indicated for them. Similarly, if there are any negative balances in the cash budget, the financing budget indicates the timing and amount of any debt or equity needed to offset these balances. A cash budget is important for a variety of reasons. For one, it allows a company to make management decisions regarding its cash position or cash reserve. Without the type of monitoring imposed by the budgeting process, a company may be unaware of the cycle of cash through its business. At the end of a year or a business cycle, a series of monthly cash budgets will show how much cash is coming into the company and the way it is being used. Seasonal fluctuations will be made clear. A cash budget also allows a company to evaluate and plan for its capital needs. The cash budget will help assess whether there are periods during the companys operations where cash is in short supply and whether the company needs to borrow money or raise capital.