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Budgets and Budgeting Process - Math Problem Example

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This paper talks that by preparing an internal company budget, the author will know the cost each object is incurring. By knowing these facts we will be in a better position to undertake cost reduction strategies and optimize our capital allocation process…
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Budgets and Budgeting Process
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For this it is important that the company take an initiative to put in place proper systems for tracing costs and allocation of budget. By installing these systems, we will be in a stronger position to generate true financial statements. And as you must be aware that strong systems of a company play a vital role in determine the share price of the initial public offering and the future share performance when the company shares are traded in the secondary market, therefore, it is important that we as a company, focused on growth, should concentrate on developing strong systems for our company.

Recent researches conduct on the importance of setting up a budget for a company has revealed new and intriguing utility or a budget document. A budget of a company enables it to limit its expenditures, predict future income, profits and potential return on investment. Company budget has become a mean by which a company can exert control over its processes, and decide form of bonuses for its employees. However, in order to have an accurate budget, it is important that the company’s management takes input from every process owner.

It is of utmost importance that every process owner understands the corporate goals and objectives, and aligns their activities in accordance with these goals and objectives. By setting up benchmarks in place by means of a budget, we would be in a better position to assess the performance of a process owner and set his reward for his job accordingly. Moreover, by forming a budget, we would be in a better position to set future goals for our company and tailor our current business model in accordance with the dynamics of our business environment.

This utility of a budget will help us to ensure that our company is in. From this study it is clear that a budget of a company enables it to limit its expenditures, predict future income, profits and potential return on investment. Company budget has become a mean by which a company can exert control over its processes, and decide form of bonuses for its employees. However, in order to have an accurate budget, it is important that the company’s management takes input from every process owner.

It is of utmost importance that every process owner understands the corporate goals and objectives, and aligns their activities in accordance with these goals and objectives. By setting up benchmarks in place by means of a budget, we would be in a better position to assess the performance of a process owner and set his reward for his job accordingly. We need to be sure that every penny that we are investing in our operations is producing a substantial return, therefore, it is important that we take an initiative to generate an internal company budget.

As the discussion highlights by forming a budget, we would be in a better position to set future goals for our company and tailor our current business model in accordance with the dynamics of our business environment. This utility of a budget will help us to ensure that our company is in a position to face unprecedented business circumstances. And since our current environment is extremely volatile, therefore, it would be a good idea to take precautionary measures that will ensure the survival this enterprise.

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