Business Finance

36問 • 2年前

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is the process of taking a comprehensive look at your financial situation and building a specific financial plan to reach your goals

financial planning

persons involved in long-term planning

more participation from top management

persons involved in short-term planning

top management is still involved but there is more participation from lower level managers

time period in long-term planning

2 to 10 years

time period in short-term planning

one year or less

level of detail in long-term planning

less

level of detail in short-term planning

focus of long-term planning

direction of the company

focus of short-term planning

everyday functioning of the company

six steps in financial planning

1. set goals or objectives 2. identify resources 3. identify goal related tasks 4. establish responsibility centers for accountability and timeline 5. establish an evaluation system for monitoring and controlling 6. determine contingency plans

for corporations, long-term and short-term identify objectives

1. set goals or objectives

this has shown in company's vision and mission statements

1. set goals or objectives

states where the company wants to be

vision statement

states the plans on how to achieve the vision

mission statement

resources include production capacity , human resources who will operate the operations and financial resources

2. identify resources

in this step , management must figure out how to achieve an objective

3. identify goal related tasks

if we identified the task to achieve goals , the next important step to do is to identify which department held accountable for this task

4. establish responsibility center for accountability and timeline

for corporations , the management must establish a mechanism to allow plans to monitor

5. establish an evaluation system for monitoring and controlling

this has been done through quantified plans such as budgets and projected financial statements

5. establish an evaluation system for monitoring and controlling

in planning contingencies or unforeseen events must be considered as well

6. determine contingency plans

budgets and projected financial statements anchored on assumptions

6. determine contingency plans

is the process of creating a plan to spend your money

budgeting

is simply balancing your expenses with your income

budgeting

purpose of budgeting in finance

planning - goal setting controlling - ensuring we move toward our goals

why is budgeting so important

1. it ensures that you will always have enough money for the things you need 2. following a budget or spending plan will also keep you out of debt or help you work your way out of debt if your current in debt

combines all of the SMALLER BUDGET within your business and terms them into ONE OVERALL BUDGET so you can get a comprehensive overview of your firm finances

master budget

is a prediction of the firm's sales over a specific period based on external and internal information

sales budget

the main purpose of this is to plan for maximum utilization of resources and forecast sales

sales budget

is a financial planning related to the units of production that the management thing to the business should produce in the upcoming period to match the estimated sales quantity , based on managements judgment related to the competition in the market , economic conditions have a production capacity , consumer prevailing market demands and past trends

production budget

is a statement of the firm that has planned inflows and outflows of cash

cash budget

is constructed by multiplying budgeted units sales by the selling price

sales budget

it forecasts the timing of this cash outflows and matches them with cash inflows from sales and other receipts

cash budget

is also a control tool to monitor the way the company handles cash

cash budget

is a tool of the company to set an overall goal of what the company's performance and position will be for and as of the end of the year

projected financial statements

it sets targets to control and monitor the activities of the company

projected financial statements

It is a process of closely monitoring of in and out of cash in the business

cash flow statement

Business Finance

Sab Sescon · 46問 · 2年前

Business Finance