Budgeting Revisited
Normally we would expect both the budget and the actual EBITDA to fall somewhere in the region of the expected value.
Normally we would expect both the budget and the actual EBITDA to fall somewhere in the region of the expected value.
There are a large number of methods used for forecasting ranging from judgmental thru expert systems and time series to causal methods.
Simulation models sets out to mimic real life company operations.
Don’t worry about the average, worry about how large the variations are, how frequent they occur and why they exists.
Budgeting involves personal judgments about future values of large number of variables that describes the nature of the business.