The budget development process commonly includes the preparation of budget guidelines and directives; a mechanism for synchronizing the budget preparation and review; procedures to expedite budget review, analysis, modification, and adoption; reporting on variances; and use of the variance reports. The whole process can be classified under the following steps: Step #1: Budget Guidelines & Directives This is the first … Read More
CMA Exam Study Notes: Characteristics of Successful Budgeting
What are the most important characteristics of successful budgeting to learn about for the CMA exam? To be successful, a budget must be Well-Planned, Flexible, Realistic, and Clearly Communicated. The Budget Must Address the Enterprise’s Goals Essentially, a budget must begin with the enterprise’s short and long-term plans and goals. The budget should not just to recreate the enterprise’s previous … Read More
Financial Ratios Series – Activity Ratios Part 2
“Some people dream of great accomplishments, while others stay awake and do them.” Anonymous Accounts Receivable Turnover This is a widely used ratio as it is a very important metric to watch. The A/R Turnover ratio measures how many times outstanding receivables from sales are collected each year. Because it’s an average, this ratio does not take into account seasonality … Read More
Financial Ratios Series – Activity Ratios Part 1
“If you want to achieve excellence, you can get there today. As of this second, quit doing less-than-excellent work.” Thomas J Watson Activity ratios measure a firm’s ability to manage its resources efficiently. More specifically manage accounts receivable, assets, inventory, and accounts payable. For these type of ratios, we will use accounts from the Profit & Loss Statement and Balance … Read More
Financial Ratios Series – Liquidity Ratios Part 4
“In the midst of movement and chaos, keep stillness inside you.” Deepak Chopra Cash Ratio The cash ratio the most conservative ratio than the current and quick ratios. To calculate it, we take the sum of cash & equivalents and marketable securities, and divide it by total current assets. As you have probably guessed, this ratio indicates a company’s ability … Read More
