Spara Ltd is a newly established, small scale company which produces fashion clothing. The
management is currently negotiating with the local bank to obtain a long term credit facility.
Discussions have been held with suppliers to obtain favourable credit terms.
Required: Explain why it is important for a newly established, small scale company such as Spara Ltd to produce a cash budget. (In your answer, please consider both the short term and long term decision making
perspective).