How successful firms budget
Article Abstract:
A survey of 402 firms in nine industry categories indicates that successful firms: (1) encourage company-wide commitment to budgets, (2) identify connections between immediate, medium-term, and long-range budgetary objectives, (3) develop detailed procedures for budget preparation, and (4) analyze variances in the budget and correct them. The survey, sponsored by the National Association of Accountants, was conducted among firms categorized as successful according to price-to-earnings ratios, self-identified financial performance, self-identified budgetary effectiveness, and average returns on equity for the past five years. In addition to discussions of the four budget-related qualities the survey identified, ten steps to more effective budgeting are discussed: (1) commitment by senior management to the budgeting process, (2) establishment of realistic budgetary goals, (3) assignment of budgetary objectives within managers' responsibility ranges, (4) assessment of senior management's goals prior to preparing departmental budgets, (5) identification of how short-term objectives help to achieve long-range goals, (6) treatment of the budgeting process as a major company project, (7) standardization of the routine aspects of the budgeting process, (8) regular reviews of actual operating results in comparison to budget, (9) discipline of mid-level managers who play "budget games," and (10) periodic auditing of the budgeting process.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1987
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Do executives practice what academics preach?
Article Abstract:
A survey was conducted to find out whether the operations research and management science techniques advocated by academicians are followed by financial officers of major corporations. Treasurers, controllers and chief financial officers from 367 Fortune 1000 corporations responded to the survey. The survey indicated a greater use of discounted cash flow to measure the rate of return and present worth in investment decisions and that management science techniques were not used widely. Comparisons of management accounting theory and actual practice with regard to capital budgeting, risk assessment, project risk adjustment and internal rates of return are discussed in some detail.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1986
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Statement on management accounting 4H: uses of the cost of capital
Article Abstract:
The National Association of Accountants has issued Statement 4H on management accounting, 'Uses of the Cost of Capital.' The purpose of the statement is to help executives understand the issues surrounding the use of the cost of capital and to describe the situations in which the cost of capital should be used in the decision-making process.
Publication Name: Management Accounting (USA)
Subject: Business, general
ISSN: 0025-1690
Year: 1988
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