In which scenario is a healthcare entity typically expected to use a cash budget?

A healthcare entity typically relies on a cash budget to effectively manage operating cash flows. A cash budget serves as a financial tool that tracks cash inflows and outflows over a specific period. This is crucial for healthcare organizations, which must ensure they have sufficient cash on hand to meet short-term liabilities, such as paying salaries, purchasing medical supplies, and covering other operational expenses.

By using a cash budget, the organization can project its cash position, identify potential cash shortages, and take corrective actions in a timely manner. This involves analyzing expected cash receipts from patient services and other sources against projected disbursements, enabling management to better control cash resources and maintain financial stability.

Other scenarios, like year-end reporting, forecasting revenue, or strategic planning, involve different financial tools and methodologies that focus on broad performance measurement, revenue projections, or long-term financial strategy rather than the immediate liquidity needs that a cash budget addresses.