Definition of Financial Budget

one that embraces the impacts of the financial decisions of the firm. It is a plan including a budgeted balance sheet, which shows the effects of planned operations and capital investments on assets, liabilities, and equities. It also includes a cash budget, which forecasts the flow of cash and other funds in the business. Cash budgeting (cash planning) is a critical part of budgeting because it is essential to have the right sums of cash available at the right times.