![]() Techniques for forecasting resources are the same as those employed to forecast sales: hunches, market surveys, time-series analysis, and econometric models. Just as managers use forecasts to approximate income from sales, they must also forecast the future availability of major resources, including people, raw materials, energy, and money. A budget becomes the primary basis and guide for financial operations in the firm.īudgeting is the principle activity in the planning function that all managers of successful firms must do in order to meet desired results. You may live under a carefully constructed budget of your own. Specifically, a budget sets forth management's expectationsfor revenues and, based on those financial expectations, allocates the use of specific resources throughout the firm.
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