Important of Budgets to a Company:.
Added on - 20 Sep 2019
Important of Budgets to a Company:Budgeting is the process of creating a plan to spend the money in the business. This spendingplan is called a budget. Creating this spending plan determine in advance whether the companywill have enough money to do the things company need to do or would like to do. Without abudget, a company is literally shooting in the dark when it comes to trying to create action plansfor a company. The budgets of a company must able to identify currently available capital,estimates expenditures and anticipates revenues.There are many benefits derived from budgets for an organization whether it is profit oriented ornot. It formalizes the coordination of activities between departments while aligning theseactivities to the company’s strategic plan. It provides a plan for decision-making responsibilitiesand enhances management’s responsibility. Creating an effective budget can be a challengingtask. It is much more than the crunching a bunch of numbers and throwing it out to the team.Apple Inc.Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne in April 1976 to developand sell the personal computers in the U.S. It was incorporated as Apple Computer, Inc. inJanuary 1977. Apple became the first U.S. company to be valued at over US$700 billion inFebruary 2015.An operating budget is a combination of expected future costs and forecasted income over thecourse of a year. The financial budget includes budgeted balance sheet, which shows the effectsof planned operations and capital investments on assets, liabilities, and equities. A financialbudget also includes a cash budget, which forecasts the flow of cash and other funds in thebusiness. Both the financial and operating budgets are equally important for the Apple Inc. TheApple Inc. is in the industry of information technology where demand for a product is uncertainso the flexible budgets are more convenient than static budgets for them.