Corporate Budgeting & Forecasting Flashcards
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Read the first 6 Corporate Budgeting & Forecasting flashcards as text
What is the main purpose of a corporate budget?
Answer: Planning and controlling financial resources
A corporate budget outlines expected income and expenses, guiding financial decision-making and performance evaluation.
Which type of budget adjusts based on actual activity levels?
Answer: Flexible budget
A flexible budget adjusts according to changes in volume or activity, providing more accurate cost control.
What is forecasting used for in corporate finance?
Answer: Predicting future financial performance
Forecasting projects future financial outcomes based on current and historical data to support planning and strategy.
What is a rolling forecast?
Answer: Continuously updated projection
A rolling forecast is updated regularly (e.g., monthly or quarterly) and extends the planning horizon beyond the fiscal year.
Which of the following improves forecast accuracy?
Answer: Combine internal and external data
Incorporating both internal financial data and external market trends helps enhance the accuracy of financial forecasts.
What is zero-based budgeting?
Answer: Starting from zero and justifying each cost
Zero-based budgeting requires justifying all expenses from a base of zero rather than adjusting prior budgets.
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