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Budgeting - Essay Example
Finance & Accounting
Pages 3 (753 words)
Budgeting plays an important role in a business. It is very significant for the reason that it permits the firm to ensure of how much credit it may provides to consumer before it begins to have liquidity troubles…
Budgets can set aims for attaining a certain level of profits and also maintaining expenses. “Budgeting can help a company use its limited financial and human resources in a manner which best exploit existing business opportunities” (Budgeting 2013). I will agree the statement of “management of any business will be ineffective without the preparation and use of budgets”. Following are some of arguments that will support to the agreement.Arguments for:
- To Help Achieve Organization’s Goals:
Budgets play efficient role in attaining organizational goals in this sense that these are the methods through passing which reach at the goals. In budget development process tries to predict that will productively reach at goals or not. Budgets puts the standards to attain goals and with the assist of these standards firms can assess the fluctuations happen throughout the year and aim to ascertain the cause from deviating from attaining the define objectives. Formulation of the budgets allows the organizational management to react actively to the market circumstances to fast way the goal achievement method. Risk identification would allow organization to adopt procedures that would guide to economic risk minimization.