Supply Chain



Budget

Definition

A budget is a financial or monetary plan which lists all the planned revenues and expenses for an entity. This financial plan is an arrangement for saving, borrowing as well as spending (Daniel, 1995).

Importance

Generally, a budged is a document which provides an estimate of anticipated revenues and expenses of an economic activity during a particular period of time (irrespective of the fact whether it is drafted for personal, family, a business, a company, an office, a government). For corporate world, this period normally corresponds to 1 year. Budget is a plan of action directed to meet a target, and values ??expressed in financial terms, to be performed in a certain time and under certain conditions specified, this concept applies to each responsibility center organization. It served as an important annual development tool for the companies or institutions whose plans and programs are formulated for one year(Horne & Wachowicz, 2005).

Benefits

Budgeting enables companies, government, private organizations and even families set priorities and evaluate the achievement of its objectives. To achieve these ends, it may be necessary to incur deficits (that expenses exceed income) or, on the contrary, it may be possible to save, in which case they will submit a budget surplus (income exceeding expenditure) (Daniel, 1995). The budget is not a standard document and has no value in the strict sense. Yet it is a tool widely used by managers: it can indeed be very useful for an organization to serve as a support for the tasks of forecasting of steering or control.

Simulation Results

During my game, I did not draft my budget. As a direct aftermath of this, I ran out of money during first two Quarters which, in turn, erode our ability to meet production goals which we set initially. If I had designed a budget initially, I would not put excessive money in commercial deposits in the first place.

Pro forma Financial Statements: Definition, Benefits & Importance

Pro forma financial statements are important components of any financial plan. These present forecasted financial for the company or any particular project for which the budget has been laid down. The financial plan consists of forecasting the financial statements of upcoming years based on historical figures. There are two main pro forma financial statements used by the companies; balance sheet and income statement (Horne & Wachowicz, 2005).

Pro forma Balance sheet

Balance sheet shows the position and composition of company's assets, liabilities and equity. Pro forma Balance sheet shows the summary of company assets, liabilities and equity at any particular time in future for which it has be formualted. Assets are the company's main resources which has the ability to generate returns for the company. In order to take access on these resources, company finances these resources through liabilities and owner's equity. Liabilities consist of accrued expenses and creditors. Creditors are usually suppliers of raw material and any other service to the MNC which contribute to the final production of units. Usually credit lines are being used by MNC meaning creditors are paid ...