Forecasting, Budgeting, Operating Budgets, Cash Budgets, TVM
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Define the difference between forecasting and budgeting. What is the difference between an operating budget and a cash budget?
What is meant by the time value of money? What is the Time Value of Money's role in finance?
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Define the difference between forecasting and budgeting.
Forecasting is when we are looking at potential trends and what we expect to happen. For example, we can forecast that sales during the fourth quarter will go up if we are in retail. Whereas with budgeting, we are saying "these are our expenses and this is how we will pay for them". For example, as a retailer, we can forecast an increase in sales during Q4, and we react to that by budgeting for more salespeople and staff in our ...
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