BUDGETS

BUDGETS

1. ·

   • DEFINITIONS
     • It is a management tool
       • Planning
       • Control
       • Development of the objectives
       • meet planned goals
       • Execute managerial functions
         • General goal setting
         • Determination of objectives
         • Implementation of strategies
         • Development of a short-term and long-term profit plan
         • Implementation of an information system by responsibility centers
         • Implementation of a control system

2. ADVANTAGES

   • Efficiency
   • Analyze the problems before making a decision
   • Rethink strategies when goals are not being achieved
   • They facilitate the optimization of company resources

3. LIMITATIONS

   • They consist of estimated data
   • If they are poorly conceived they can lead to make wrong decisions
   • To be effective, you must have the participation of all members of the company
   • Your results or benefits will be seen in the medium and long term

4. CLASSIFICATION

   • Depending on the flexibility
     • Rigid, static, fixed or assigned
       • They are made for a single level of activity
       • They do not allow adjustments for variations in reality
       • They leave aside the company environment
     • Flexible or variable
       • Are made for different levels of activity
       • They are dynamic and adaptive
       • They are widely accepted in the field of budgeting modern
   • According to the period of time
     • Short term
       • One year trading cycle
     • Long-term
       • Development plans adopted by states and large companies
   • Depending on the field of application
     • Operating or economic
       • Sales Budgets
       • Production Budgets
       • Shopping budget
       • Cost-Production Budget
       • Cash Flow Budget
       • Master Budget
     • financial
       • Treasury Budget
       • Budget of capitalizable expenditures
   • According to the sector of the economy
     • Public Sector Budgets
     • Private Sector Budgets

5. BEGINNING

   • Forecast
   • Planning
   • Organization
   • Direction
   • Control

6. REQUIREMENTS

   • Must have extensive knowledge of the company
   • Budgets should be used for company decision making
   • You must have flexibility to modify budgeted figures
   • You must have your information system to generate budget reports

7. ELABORATION

   • 1. Each area is provided with a summary of the analysis of economic variables
   • 2. Each head must prepare the budget for their respective area
   • 3. The budget director analyzes them and summarizes them in a single
   • 4. The budget committee evaluates and approves them
   • 5. The company's final budget is published
   • 6. Finally, it is distributed to each area manager for execution

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