| One of your company's strongest assets is its | | | | anticipated future growth of your company. |
| ability to assemble an Annual Operating Budget | | | | A budget is a plan of activities expressed in |
| and Cash Flow Estimate and to determine financial | | | | monetary terms of the assets, equities, |
| requirements for achieving revenue goals. In | | | | revenues, and costs that will be involved in |
| order to make wise, financial decisions, it is | | | | carrying out your company's plans. A Master |
| imperative to know your breakeven point, your | | | | Budget is a set of projected or planned financial |
| direct labor costs in relation to your cost of goods | | | | statements. The Master Budget consists |
| sold, and your monthly cash requirements. | | | | basically of a pro forma income statement, a pro |
| Acquiring operating performance data, on a timely | | | | forma balance sheet, and a statement of cash |
| basis, strengthens your ability to better manage | | | | flows. As a management tool, the Master |
| your business. | | | | Budget is used for both planning and controlling. |
| Reliable operational plans, budgets, and forecasts | | | | At the beginning of an accounting period, the |
| --that are accurately produced--are integral | | | | budget establishes your financial plan for the |
| elements in growing your business. With | | | | accounting cycle. At the end of the accounting |
| systematic processes in planning, budgeting, and | | | | period, the budget serves as a measure/control |
| forecasting, your staff shifts its scope from data | | | | device that helps management analyze its actual |
| collection to meaningful data analysis. Planning, | | | | performance against the budgeted plan. The |
| budgeting, and forecasting processes connect | | | | purpose of this analysis is to identify shortcomings |
| your company's budgets to your company's | | | | in the operation and to take corrective action that |
| strategies. The connection between budgets and | | | | will improve future performance. Budgeting and |
| strategies ensures that the financial resource | | | | forecasting requires that you envision what your |
| requirements are available to support the | | | | company will do in the future. |