AFM481 Chapter Notes - Chapter 6: Pro Forma, Income Statement, Controllability

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM481
• Professor: Grant Russell

Document Summary

Financial budgets: pro forma income statements, cash flow statements and balance sheets report results in gaap compliant formats. Nonfinancial budgets: report on the timing and quantity of resources required to achieve predicted financial results: achieve coordination of all business functions in the value chain, communicate directions and goals to different departments. Judge performance by measuring financial results against planned objectives, activities and timelines to learn about potential problems: motivate employees to achieve their goals. Identify the problem and uncertainties: maximize profit and thrive in the long term. Identify and understand control and planning issues: obtain information. Set of specific expectations against which actual results can be compared: mandatory achievements. Advantages of budgets: compel planning and monitoring of the implementation of plans, provide reliable performance assessment criteria, promote communication and coordination within the organization. Strategic analysis: evaluation of how well the organization has matched its own capabilities with the relevant features of the competitive environment to progress forward its future success.