WEEK 7 DQ 1 How does budgeting help management make good business decisions

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WEEK 7 DQ 1

You know how important it is to create budgets for your household. How does budgeting help management make good business decisions?

Budgeting is crucial for the management of a company as it enables them to make proper decisions such as maintaining adequate cash for paying back loans to creditors, managing raw materials in accordance with production targets, and managing adequate quantity of finished goods for meeting needs of the customers. It also helps them in making future plans of the company for achieving its financial objectives. A good budget helps in predicting future problems and enables them to find the solutions in advance. Budgeting also motivates the managers by laying concrete objectives of the company before them.

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