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Foundations of Control, Popular financial tools used by managers to check…
Foundations of Control
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Budgets
- Budgets are another type of financial control tool that are used for planning and controlling.
- When a budget is created, it is a planning tool; because it shows which work activities are important and both what resources and how much of them should be allocated to those activities.
- Budgets also are used for controlling since they provide managers with quantitative standards against which to measure and compare resource consumption.
- If deviations are significant enough to require action, the manager examines what has happened and tries to uncover why. With this information, necessary action can be taken.
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Popular financial tools used by managers to check for problems include: Financial statement/ratio analysis;Budget analysis.
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