BCT 002 – The Important Elements of Budgeting & Planning

Process

• Strategy – direction and vision
• Implementing strategy – the operational planning process
• Budgets – the financial expression of the operating plan
• The purpose of budgets – control
• The human side of budgeting
• Case study, part I – roles and responsibilities of the team

• Elements of the budget framework
• The financial statements
• Advantages and limitations of budgets
• Reporting – the key to control
• Case study, part II – preparation of financial statements

• Operating versus Nonoperating revenue
• Revenue recognition versus Sales
• Sales forecasting
• Profitable growth and the cost of capital
• Pricing considerations
• Case study, part III – the sales forecast

• Cost, profit, volume relation ships
• Cost of service provided
• Operating expenses – selling, G/A, R/D
• Directly variable expenses
• Fixed expenses
• The allocation problem
• Assignable and non-assignable expenses
• EBIT, EBITDA
• Case study, part IV, budgeting operating profit

• The business unit statement
• Variance analysis
• Priorities
• Long-term versus Short-term results
• Contingency plans
• How not to cut a budget
• Case study, part V, the profit centre statement

• Key financial ratios
• The capital budget – NPV, IRR
• The cost of capital and the hurdle rate
• Case study, part VI, investment decision – lease or buy

• Budgeting cash requirements
• Developing a cash flow forecast
• The three sources of cash
• Free cash flow
• The completed budget

This module will comprise a recap of the key points of the programme, an evaluation of each team’s budget

and an appropriate conclusion.