A cash flow budget primarily measures what aspect of financial health?

A cash flow budget is a financial tool that tracks the inflow and outflow of cash within a specific period, allowing an organization to manage its liquidity and ensure that it has adequate funds to meet its obligations. By focusing on the cash available at the end of the period, it highlights how much actual cash is on hand, which is crucial for operational stability and planning.

This measure is fundamental for assessing financial health because it reflects the company’s ability to pay bills, invest in opportunities, and weather financial difficulties. Unlike net income, which can be influenced by non-cash transactions and accounting practices, cash flow provides a clearer picture of the cash available for both short-term and long-term needs.

The other aspects mentioned, like accounts receivable or profit/loss, are important for overall financial analysis but do not directly indicate immediate cash availability. Similarly, sales less purchases does not provide a comprehensive view of cash flow since it can overlook other necessary cash inflows and outflows. Thus, evaluating the cash on hand at the end of the period accurately captures the essence of liquidity and financial health that a cash flow budget is designed to measure.