Collecting information and forecasting in budget, Financial Management

Collecting Information and Forecasting:

All budgets must be based on accurate and reasonable information. A budget derived from information which is irrelevant to the actual organisation will result in figures and plans which in no way reflect the true needs of the organisation.

The most obvious source of information for budgeting purposes is the organisation's current financial records.  Information on previous performance should always form the basis of budget forecasts. Analysis of reports such as previous budgets (and actual results achieved), the business's profit and loss statement, and cash flow statement, will allow the identification of areas of particular strengths and weaknesses, and provide the opportunity for budget planners to address those areas in any new budget process.

Once the information is gathered and analysed, budget planners should seek to forecast any major changes in the industry/organisation that could affect the financial performance of the business during the coming year. This process will allow for the inclusion of any special circumstances within the budget.

An example of a special circumstance in the real estate context could include the purchase by the agency of a new commercial property (to relocate offices). Such a project would involve increased expenditure to meet purchase cost, relocation costs and the cost of business down time. If the purchase involved finance, it would also mean increased repayments following the purchase.

As such a circumstance is likely to be one off or at least rare, the inclusion of expenditure relating to the purchase is likely to involve reducing the budget in other areas of expenditure to compensate.

 

Posted Date: 10/1/2012 4:16:52 AM | Location : United States







Related Discussions:- Collecting information and forecasting in budget, Assignment Help, Ask Question on Collecting information and forecasting in budget, Get Answer, Expert's Help, Collecting information and forecasting in budget Discussions

Write discussion on Collecting information and forecasting in budget
Your posts are moderated
Related Questions
discuss the applicability of operating cycles of vegetable growing

Benjamin Tang currently has holdings in the following three companies:                                                                             E(R)                      σ

Reasons for Growth of Hedge Funds Many Hedge Fund strategies have the ability to generate positive returns in both rising and falling equity and bond markets. Inclusion of Hedg

What is risk free rate of return There is a 'risk free rate of return' (also known as time preference rate) which is used to compensate for the loss of not being able to invest

How many types of segments in the mutual fund industry? There are two segments into the mutual fund industry: long-term funds and short-term funds. In Long-term funds bond fund

Market price is used for determining the duration of a mortgage-backed security in the coupon curve duration. This approach to calculate the duration of mortgage-bac

Cash Flow Statement Ratios: This ratio, which is defined as a percentage, compares a company's operating cash flow to its total sales or revenues, which provide investors an i

Credit analysis is the financial analysis used for determining the creditworthiness of an issuer using various quantitative and qualitative factors. The four Cs an anal

Question: On 1st October 2001 a man then aged 34 took out an endowment assurance policy with a sum assured of $100,000 payable on survival to age 50 or at the end of the year o

Q. What do you mean by Letter of Credit? A letter of credit is an arrangement whereby a bank helps its customer to obtain credit from its (customer's) suppliers. When a bank op