11 Budgeting and Forecasting
What are the main barriers to strategic execution?
1. vision barrier
2. people barrier
3. management barrier
4. resource barrier
How can we translate strategy into targets and budgets?
1. objective (what)
2. strategy (how)
3. measure
4. target
What four metrics should be included in a balanced scorecard to measure performance?
1. financial
2. customer
3. people (employees)
4. operations (process)
What does the core structure of a robust budgeting framework look like?
master budget at the center, made up of
1. operating budgets
2. capex budgets
3. cash budgets
How can we categorize budgets based on involvement?
1. imposed budgeting
2. negotiated budgeting
3. participative budgeting
What are the 4 most common types of budgeting?
1. incremental budgeting
2. value proposition budgeting
3. zero-based budgeting
4. activity-based budgeting (i.e. "output-input budgeting")
contribution margin = ...
# = revenue - variable costs
% = (revenue - variable costs) / revenue
net earnings = ...
= revenue - variable costs - fixed costs
= contribution margin - fixed costs
breakeven point (or sales) = ...
= fixed costs / contribution margin (%)
margin of safety (%) = ...
= (sales - breakeven sales) / sales
What are the quantitative and qualitative forecasting methods?
1. moving averages
2. simple linear regression
3. multiple linear regression
4. PEST framework (political, economic, social, technological)
5. Porter's 5 forces (entry, substitutes, buyers, suppliers, firms)
Which Excel function should one use for simple linear regression to forecast a budget?
=FORECAST()
data analysis tools in Excel and when/how to use them
1. Goal Seek
option A W
"what value should a certain input have to reach a target output"
2. Solver
option A V 2
"what value should a certain input have to reach a Min/Max/target output"