COMM-2016EL Study Guide - Final Guide: Budget, Operating Budget, Pro Forma
29 Oct 2017
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Document Summary
A budget is a plan of action, a formal quantitative benchmark to measure actual performance. A budget can help identify operating or financial problems that will arise both in the short and long term. Once a problem is identified the company can work on an action plan to remedy the problem. Organizations use several different forward looking budgets such as: Strategic plan- this is a forward looking plan that sets out the goals and objectives of an organization (mainly qualitative). Long- range planning- forecasting financial results for 5-10 years. This is often used for additions or deletions of product lines, expansion or development of new plants, and major acquisitions etc. Capital budgeting- used in combination with long range planning. This budget details planned expenditures and long term investments. In order to survive in the long run companies must think long term.
