How does budgeting help management make good business decisions?
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budgetting helps the top management to evaluate their long term & short term projects by calculation the present value of the future cash flows.
the budgetting helps the management to know whether in how many years they will be able to cash-in their inital & periodic investments.
budgetting helps in computing the rate of retun of the projects the company has undertaken.
budgetting acts like a transparent worksheet for the company which helps the top managemnt in getting loans approved from the investment companies or banks with projected cash inflows in future.
budgetting helps in abridging the gap between the desired performance & the actual performance.
a periodic revison of the capital budget draws the attention of the management to give serious concern to the areas which are not performing up to the mark.
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