8. Budgeting and Planning Cycle

So far, this book has focused on events that have already occurred. The income, balance sheet, and cash flow statements provide a picture of a company’s past performance. But understanding what has already happened isn’t much help if you can’t use it to plan for the future. This chapter provides an overview of financial planning and budgeting and discusses how forecasts and projections, based on a company’s recent history, form the foundation for planning.

Textbooks describe the elements of good business planning, including mission statements, business strategies, financial ...

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