"The main objective of a firm's budget

A well-constructed budget should provide managers with sufficient information to make good decisions that are consistent with their organization’s financial goals. For instance, if a company wants to increase its market share or improve customer service then budgets can be adjusted accordingly so that resources are allocated towards those areas where they will have the most impact. By taking into account both current and future income & expenditure streams when formulating a budget, firms can ensure they remain fiscally sound while still achieving desired results – something which cannot be done simply by looking at end-of-year cash flow figures. In conclusion I believe that while assessing one’s current or expected level of liquid assets is certainly important when managing any business venture; one shouldn’t forget about other equally important aspects (such as meeting strategic objectives) which must also be taken into account when constructing an effective budget.

Sample Solution

I do not agree with this statement made by my co-worker. The main objective of a firm’s budget is not to determine the amount of cash it will have in the bank at the end of the year but rather how much money it can generate and spend over a given period. A budget serves as an important tool for helping companies plan and control their operations, set goals and objectives; hence, it should be designed with these broader considerations in mind rather than being focused solely on short-term outcomes such as cash flow.