Chapter 7. Budgeting. The Purpose of Budgets. A budget…. is a blueprint for action for a specific period that is based on sales, cost, and productivity estimates developed in the marketing plan shows the financial impact of an efficient and effective execution of the marketing plan.
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Example: figure 7-3, text page 102
Example: figure 7-4, text page 103
The Cash Cycle
Example: figure 7-5, text page 104
Capital Expenditure Budget
Relationships among theThree Types of Budgets
Some say that the cash flow budget is more important than the operating budget. Do you agree or disagree? Explain your answer.
If you are making a budget for the same period, why are the operating budget and cash flow budget likely to give you different answers? Explain.
Discuss why a budget is a great motivational tool for inspiring better performance by employees.
If business success rests on meeting customer needs, why is there so much concern about meeting the financial objectives?