Question

Discuss the 5 benefits is budgeting and planning in banks .

Answer 1

1.Providing the basis for detailed sales targets, staffing plans, inventory production, cash investment/borrowing, capital expenditures (for plant assets, etc.), and so on.

2. Provide benchmarks against which to compare actual results and develop corrective measures;

3. Give managers “preapproval” for execution of spending plans;

4. Allow managers to provide forward-looking guidance to investors and creditors.

5. Budgets are necessary to persuade banks and other lenders to extend credit.