Budgeting is a process of planning, setting goals and defining the objectives of the management that are needed for a given period of time. It is the tool that provides specific direction and achievements for the company. It also controls the business setting, as well as it helps the management to study the financial aspects of the business and challenges of each department, and learn how to solve these problems. Budgeting also focuses on the essential points in evaluating the alternative actions before coming up with final decisions. Similarly, this is also the financial plan to control the future operations and outcome of the business. The …show more content…
Moreover, budgeting helps the management in the decision making, as well as in the measurement of the given variables, so as in evaluating the coordination of the joint efforts of the various people involved in the business operations. In this connection, the there are certain steps that involve in creating a budget in determining the overall strategic objectives of the business like annual budgets and operating business plans. On the other side, corporate goals include the earning potentials and growth of the business, as well as the cost reduction, sales target, productivity, revenues and the quality of products and services that company provides the customers. Similarly, it requires deeply the analysis and comprehension of historical background of the company, as well as the current trends, so as the competition norms in the industry. For the financial allocation, it can be raised by expected revenues within the specific period of time, through financing, net worth. cash flow, production purchases, among others.