ABSTRACT
This chapter helps us to gain an understanding of the budget development process, budgets as financial tools, profit and why it is the starting point for budget development, budget management as an essential element in financial stability, and management reports and interpreting budget variances. A budget is a financial game plan for the future that projects what revenue will be generated and what expenses will be incurred over a specific period of time. The budget is the most important tool in the financial toolbox. Managers can compare actual financial figures against the budgeted amounts and determine where adjustments need to be made to stay on target for the company's projected profit. The chapter discusses the forecasting that follows explains how capital requirements are determined for projected increases in revenues. Forecasting is a process that determines the working capital, asset, and personnel needs for projected revenues. These determinations are based upon financial data in the company's database.
