How does a cash flow budget differ from an operating budget?

The cash flow budget specifically projects actual cash inflows and outflows over a certain period of time. This type of budget is crucial for understanding the timing and amounts of cash entering and leaving the business, which helps ensure that there are sufficient funds available for operational needs, debt repayment, and other financial obligations.

In contrast, an operating budget focuses on the projected revenues and expenses related to the business's core operations over a specified period, often conceptualized in terms of profit and loss. While an operating budget includes expenses and revenues, it does not provide a detailed view of the cash position at any given time.

The correct answer illustrates the fundamental purpose of a cash flow budget: to provide a clearer picture of liquidity rather than just profitability, thereby assisting stakeholders in making informed decisions regarding cash management.