Finance For Managers Essay Example | Topics and Well Written Essays - 1500 words

Finance For Managers - Essay ExampleTop managers use ciphers for the company as a whole while middle managers traditionally focus on the budget performance of their department or division. Normally the types of budgets used in different units pertain to expense budget, revenue budget, cash budget and capital budget.And expense budget focuses on anticipated and actual expense for each department. When actual expenses exceed budgeted amounts, the variance signals the need to managers to identify whether a problem exists. It could highlight inefficiencies or leakages or in retrospect if expenses be below budget, it could signal exceptional efficiency or failure to meet some other target, e.g. sales. receipts budget lists forecasted and actual revenues of the division and / or the organization. Cash budget estimates receipts and expenditures of money of a insouciant or weekly basis it shows the level of funds flowing through the organization and their nature. Cash budget is very i mportant for liquidity management of the company for daily business activities. Capital budget is for be after investments in major assets. It not only have large impact on future expense, it is for investments knowing to enhance profits of the organization. Capital budgets needs to be monitored in order to evaluate whether the assumptions made near return on such investments are holding true.Many traditional companies use top elaborate budgeting which means that the budgeted amounts for the coming year are literally imposed on middle and lower level managers. The managers set departmental budget targets in accordance with over all company revenues and expenditures specified by top executives. Although there are some advantages to the top down process, the movement toward employee empowerment, participation and learning encourages the espousal of bottom up budgeting a process in which lower level managers anticipate their departments