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Budgeting and Forecasting
Budgeting and forecasting are business processes essential to a company’s operations. Budgeting involves planning for revenues and expenses. Forecasting is a method of predicting trends based on historical and current events.
1,416 Questions
What are the difference between cash budgeting and capital budgeting?
capital expenditure budget is a part of cash budget.cash budget involves managerial activities while capital expenditure budget involves day to day activities may be for long range or short range
'water reserves' is an artificial body of water.
A reservoir, A natural or artificial pond or lake used for the storage and regulation of water . Reservoirs may be created in river valleys by the construction of a dam or may be built by excavation in the ground or by conventional construction techniques such a brickwork or cast concrete.
The term reservoir may also be used to describe underground reservoirs such as an oil or water well.
What are the characteristics of zero based budgeting?
What are the main characteristics of Zero base budget
What are the Advanatages and disadvantages of sinking fund method of depreciation?
Sinking Fund Advantages and Disadvantages
On paper, sinking funds appear to be a great program for both businesses and their investors. However, there are advantages and disadvantages to using this type of fund.
Investor Advantage: Piece of Mind
For investors, these accounts represent peace of mind. Investors with securities backed by these funds know that the company is less likely to be unable to pay dividends. Additionally, corporate debentures supported by specialized funds are more likely to receive the principle payment upon maturity.
Corporation Advantage: Long-Term Debt Management
Sinking funds are created so companies can address their debt in advance. As such, businesses have the comfort of having established long-term solutions for handling their debt and repaying their investors. In addition, these accounts give businesses the opportunity to plan for the cost of purchasing new assets such as upgraded machinery, construction work, and new technology.
Example
Technicolor NationwideTechnologies (TNT) establishes a sinking fund at the beginning of its establishment in 1985. 10% of the overall profits are then invested into this account. In addition to these payments, the trust company invests the fund's assets into long-term low risk stocks and bonds to grow capitol. As computers and information technology changes, TNT is able to purchase new electronic equipment using the resources from the fund.
Investor Disadvantage: Repurchasing of Bonds
Corporations with sinking funds periodically repurchase securities and debentures before their maturity. As such, these bonds are repurchased without consent directly from stockholders and bondholders. Businesses can choose to "call" bonds at any time, and no choice is given to the investor about whether or not to part with their holding. Any investor whose bond is purchased will have to forfeit their interest payments. This creates an atmosphere of uncertainty for investors, as they have no knowledge of when a company will choose to purchase back bonds.
Example
Thomas and Jack have both purchased bonds from Harriet's Corporate Housing (HCH). Jack decides to sell his bonds but Thomas wants to hold onto his. However, HCH suddenly "calls" the bonds and purchases them from some investors, including Jack and Thomas. Jack doesn't mind, because he had already decided to sell his off his bonds. Unfortunately, Thomas is upset by his inability to choose to keep his investment, and by the unexpected loss of his interest payments.
Investor Disadvantage: Repurchasing of Bonds at Lower Prices
Not only do corporations repurchase bonds regularly, they do so at a lower price than the bond's initial value. This par value is usually less than what the bond is worth within the actual marketplace. Some companies will also wait for interest rates on bonds to go down before purchasing back securities. As a result, bondholders stand to lose substantial amounts of money when their bonds are repurchased by companies at a lower price than their initial investment.
While sinking funds can represent a more secure investment, they also present the risk of a sudden loss at anytime. This lack of control should be carefully considered if you choose to invest in sinking fund backed stocks and securities.
What kind of companies use budget lapsing?
some universities use it and governmental agencies that have to account for all funds payable and received
Well, than one can be 'Jack of all Trades', instead of 'Master of One'
How do you calculate debtors turnover ratio?
Debtor turn over ratio = Total sales / debtors
By using this formula debtor turnover ratio can be found.
Role of cash budget in cash mgt?
1. Cash budget plays a significant role in cash management because it helps the management to find out when they required excess cash and when they don't required enough cash to maintain as well as it helps the management to find out when they will have excess cash available so they can invest and earn interest as well as when they will have short of money to run day to day activities so that they can arrange money for critical times, if they don't maintain cash budget they will unable to find out this information well before time and they may have to face problems.
What are the Challenges of a computerized accounting system?
Two major challenges of a computerized accounting system are data loss and fraud. An increase threat of viruses, hackers stealing data, and power failures are a constant challenge. Creating systems to control who has access to information and accounting data is important to prevent fraud.
Advantage and disadvantage of management accounting?
Management accounting is beneficial because it looks to the future and moves forward, it is often very flexible, and it helps project analysis for business decisions. The disadvantages include that it is dependent upon extreme accuracy, it is not comparable to other data, and it can be affected and tweaked too easily.
How do you calculate utilization rate?
It is also known as operating rate. Formula is actual input minus potential output over potential output, multiplied by 100 utilization rate.
straight-line
Why organizations set budgets?
They need to have a budget because they have to know how much money will be needed on the plan
How is total revenue calculated?
Total revenue is calculated by multiplying the price of the product sold by the quantity sold. PQ = R. Total profit is total revenue minus costs incurred. R-C = P
How do you calculate resource utilization?
This is the process of calculating actual track or scheduled time against the capacity of a specific resource. You can use assigned and unassigned resources for this ask as you input information into the equation.
What is the Direct cost in shoe manufacturing business?
Following are direct costs of shoe manufacturing business:
1 – Leather (Direct material)
2 – Workers salary on machine (direct labor)
3 – Electricity expense etc
What is the difference between expired cost and unexpired cost?
expired cost - benefit has been received unexpired cost- benefit may or may not be received
What are the characteristics of financial accounting?
Financial accounting allows business a systemic way to enter financial transactions. The following are some of the characteristics of financial accounting: transactions must be monetary, legal requirement, external use, and historical nature.
The 12-month period that ends when a company's activities are at their lowest point is called the?
A Fiscal Year is any consecutive 12-month period that a business chooses. Usually, the fiscal year end date is the low point in business activity for the year
