FINANCIAL TECHNIQUES USED IN THIS STUDY
Budget and budgeting techniques
In order to properly plan and set goals, several different budgets must be created. This article discusses some of the more common budgets used by businesses.
SALES BUDGET: The sales budget is an estimate of future sales. It is used to create company sales goals.
PRODUCTION BUDGET: Product oriented companies create a production budget. It is an estimate of the number of units that must be manufactured in order to meet the sales goals. The production budget also estimates the various costs involved with manufacturing those units, such as labour, material, and other expenses.
CASH FLOW BUDGET: The cash flow budget is a prediction of future cash receipts and expenditures for a particular period. It usually covers a period in the short-term future. The cash flow budget helps the business determine when income will be sufficient to cover expenses and when the company will need to seek outside financing.
MARKETING BUDGET: The marketing budget is an estimate of the funds needed for promotion, advertising, and public relations in order to market the product or service.
PROJECT BUDGET: The project budget is a prediction of the costs associated with a particular company project. These costs include labour, materials, and other related expenses. The project budget is often broken down into specific tasks, with task budgets assigned to each.
CAPITAL BUDGET: The capital budget is a prediction of company needs in regard to fixed assets, such as buildings, vehicles, machinery, and other equipment. It includes the cost of upgrading present assets, the cost of acquiring new assets, costs associated with maintenance of the assets, and fees associated with the assets. The capital budget helps the company plan for the acquisition and upkeep of these assets, which may include use of available cash or outside financing.