Annual budget
What is it?
The key figure represents the complete and comprehensive budget that has been prepared for the entire current year. It includes all budget items that have been planned and allocated to support the organization's operations during the year.
This key figure provides an overall overview of the organization's financial plans and goals for the entire year and serves as a basis for financial planning and governance. It usually includes details of budget items for different departments or areas within the organization and is critical to ensuring that the organization has sufficient financial resources to support its operational goals and projects during the year.
The full-year budget is used as a reference point to monitor and evaluate the organization's financial performance during the year and to make financial decisions and adjustments when necessary to achieve budget goals.
How is it calculated?
Budget summed up
* Includes budget for the current year.
Why is it important to follow?
Following the KPI is crucial for several reasons:
Financial planning: It provides a complete overview of the organization's financial plans and goals for the entire year. It is a fundamental component of financial planning and helps the organization to structure its financial resources.
Goals and direction: The annual budget sets the direction for the organization's financial goals and priorities during the year. It provides guidance to achieve desired results.
Decision support: It serves as a valuable decision support for financial decisions. Decision makers can use the total budget to assess whether the organization has sufficient funds to support planned projects and initiatives.
Cost control: By comparing actual expenses with the full-year budget, the organization can monitor and control its costs. It helps to avoid overruns and adhere to cost control.
Performance monitoring: It enables evaluation of the organization's financial performance during the year. By comparing actual results with the budget, deviations can be identified and action taken when necessary.
Communication and transparency: The annual budget is used to communicate the organization's financial plans and goals to internal and external stakeholders. It is an important part of financial transparency and accountability.
In summary, the ratio is a key component of financial planning, governance and performance monitoring. It provides the organization with a directional and comprehensive view of its financial goals and resources for the entire year and enables decision-making and adaptation to achieve these goals.
Created by Homepal
9/15/2023
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