Company may face situations where they have a cash deficit. In such a scenario, appropriate action must be taken if the company is to continue to trade day to day basis.
Companies may sometimes have cash surpluses. The surplus needs to be used in the best way, and this will often mean investigating it.
Deficit:
A cash deficit is a shortage of available funds to satisfy current obligation.
Surplus
A cash surplus is the value of cash over and above what is required to satisfy current obligations.
Business will sometimes have surplus cash because of improvements in working capital management , sales of non current assets, or because unexpectedly large amounts of cash have been generated from operatioons.
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