From the course: Excel: Management Accounting

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Budgets vs. forecasts

Budgets vs. forecasts - Microsoft Excel Tutorial

From the course: Excel: Management Accounting

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Budgets vs. forecasts

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- [Instructor] As part of management accounting, we're often called upon to construct two different types of financials that seem similar, but in fact are distinct, budgets and forecasts. I'm in the 05_02_Begin Excel file. Now, what we have here initially is our basic budget, and this allows us to go through and assess the financial health of the Acme Dirt Company throughout a single year. In particular, we can use this to understand how the firm is positioned and if they're going to run into any cash constraints throughout the year, what their level of cash holdings are going to look like, and then take action as needed. That's our budgeting model. But we might also be asked to come up with, say, a long run forecast, likely tied to the income statement. So if we look at this model, this projects for the Acme Dirt Company what their income statement will look like from 2024 through 2027. And as we can see, we've…

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