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A master budget comprises three key components. First, the operating budget, which forecasts revenues and operating expenses, akin to an income statement. Second, the capital expenditures budget, which mirrors a balance sheet by accounting for capital spending on non-current assets like property and equipment. Lastly, the cash budget connects the first two, detailing cash inflows and outflows to ensure sufficient cash is available for company needs. Together, these three components enable the creation of budgeted financial statements: the income statement, balance sheet, and cash flow statement, providing a comprehensive overview of the company's financial planning.