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Budgeting & Forecasting › The Budgeting Process

What is a budget?

Beginner

Answer

A budget is a quantified financial plan for a future period, expressing management's targets for revenues, costs, cash flows, and resource use. It translates strategy into numbers, guides operations, coordinates activities, and provides a benchmark against which actual performance is measured and controlled.
Real-world example A company sets an annual budget of $10m revenue and $7m costs as its financial plan for the year.

Common follow-ups: How does a budget differ from a forecast? | What are the purposes of a budget?