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Budgeting, forecasting and projection

BAR Chapter 5 · Area I · Blueprint I.B.1

Chapter 4 looked back at what went wrong. This chapter looks forward: how many desks will we sell, what must we make and buy, will we run out of cash, and how many must we sell to break even? The Blueprint wants budgets built on supportable assumptions, forecasts from data, and planning tools such as breakeven, sensitivity and what-if analysis. Pinewood Furniture, a maker of solid-wood desks, plans its year with us.

In this chapter

1. Clean data and supportable assumptions
2. The operating budgets: sales, production and materials
3. The cash budget
4. Pro forma statements and the flexible budget
5. Forecasting techniques
6. Cost-volume-profit and breakeven
7. Sensitivity, what-if and cost-benefit analysis
8. Predictive analytics and checking the forecast

This chapter has 8 lessons, 50 practice MCQs with explanations and 20 simulations, plus flashcards and a recall sheet.

What this chapter covers

• Transforming data
• preparing budgets
• forecasting techniques
• cost-benefit, sensitivity, what-if and breakeven analysis
• predictive analytics

Chapter 4: Variance analysis and sales analysis · Chapter 6: Capital structure