Anonymous
Mar 21
Explain the steps followed to calculate Gross margin budget, partial budget, complete budget, and cash flow budget in a financial year with 10 references?
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Mar 21
Calculating various budgets in a financial year involves different steps and considerations. Here is an overview of the steps followed to calculate Gross margin budget, partial budget, complete budget, and cash flow budget:
1. Gross Margin Budget:
- Determine the total revenue expected from sales.
- Calculate the cost of goods sold (COGS) by adding up the direct costs associated with producing the goods.
- Subtract the COGS from the total revenue to get the gross margin.
- Calculate the gross margin percentage by dividing the gross margin by the total revenue and multiplying by 100.
2. Partial Budget:
- Identify the specific changes or decisions that will impact the budget.
- Estimate the costs associated with the changes, including any additional expenses or savings.
- Calculate the potential increase or decrease in revenue resulting from the changes.
- Subtract the additional costs from the potential revenue to determine the net impact on the budget.
3. Complete Budget:
- Gather all relevant financial information, including revenue projections, expenses, and capital expenditures.
- Create a detailed budget for each department or area of the business.
- Review historical data and industry trends to make accurate projections.
- Ensure that the budget is balanced, with total expenses not exceeding total revenue.
4. Cash Flow Budget:
- Start with the beginning cash balance for the period.
- Estimate the cash inflows from sources such as sales, investments, and financing.
- Calculate the cash outflows, including expenses, loan payments, and other obligations.
- Determine the ending cash balance by subtracting the cash outflows from the cash inflows.
References:
1. "Budgeting Basics: How to Create a Budget" - Investopedia
2. "Understanding Gross Margin" - The Balance Small Business
3. "Partial Budgeting: A Tool for Prioritizing Farm Management Strategies" - Penn State Extension
4. "Complete Budgeting Guide" - QuickBooks
5. "Cash Flow Budgeting" - Small Business Administration
6. "How to Create a Cash Flow Budget" - The Hartford
7. "The Importance of Budgeting in Business" - Forbes
8. "Budgeting and Forecasting" - Corporate Finance Institute
9. "Budgeting for Small Business" - U.S. Chamber of Commerce
10. "Cash Flow Management: A Guide for Small Business" - SCORE Association.
1. Gross Margin Budget:
- Determine the total revenue expected from sales.
- Calculate the cost of goods sold (COGS) by adding up the direct costs associated with producing the goods.
- Subtract the COGS from the total revenue to get the gross margin.
- Calculate the gross margin percentage by dividing the gross margin by the total revenue and multiplying by 100.
2. Partial Budget:
- Identify the specific changes or decisions that will impact the budget.
- Estimate the costs associated with the changes, including any additional expenses or savings.
- Calculate the potential increase or decrease in revenue resulting from the changes.
- Subtract the additional costs from the potential revenue to determine the net impact on the budget.
3. Complete Budget:
- Gather all relevant financial information, including revenue projections, expenses, and capital expenditures.
- Create a detailed budget for each department or area of the business.
- Review historical data and industry trends to make accurate projections.
- Ensure that the budget is balanced, with total expenses not exceeding total revenue.
4. Cash Flow Budget:
- Start with the beginning cash balance for the period.
- Estimate the cash inflows from sources such as sales, investments, and financing.
- Calculate the cash outflows, including expenses, loan payments, and other obligations.
- Determine the ending cash balance by subtracting the cash outflows from the cash inflows.
References:
1. "Budgeting Basics: How to Create a Budget" - Investopedia
2. "Understanding Gross Margin" - The Balance Small Business
3. "Partial Budgeting: A Tool for Prioritizing Farm Management Strategies" - Penn State Extension
4. "Complete Budgeting Guide" - QuickBooks
5. "Cash Flow Budgeting" - Small Business Administration
6. "How to Create a Cash Flow Budget" - The Hartford
7. "The Importance of Budgeting in Business" - Forbes
8. "Budgeting and Forecasting" - Corporate Finance Institute
9. "Budgeting for Small Business" - U.S. Chamber of Commerce
10. "Cash Flow Management: A Guide for Small Business" - SCORE Association.
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