Business budgeting is an extremely important financial tool available to any enterprise and it’s a big area of study for the CMA exam. Maintaining both short and long-term financial plans enable enterprises to control their cash flow, profitability, cost, etc. Here’s a list of the top 10 best practices of budgeting: Best Practice #1: Short & Long-Term Plans The most … Read More
CMA Exam Study Notes: The Budget Development Process
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
