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How does the master budget serve as a coordination tool? How is the budgeted balance sheet prepared? How do changes in one budget cascade through the master budget? How do you build the master budget for a service organization versus a manufacturer? How do you incorporate financing and dividends into the master budget? How do you validate/sense-check a completed master budget? How does the capital budget integrate into the master budget? How do you model working capital changes in the master budget? How do you flex or revise the master budget during the year? How do you build a master budget model that recalculates automatically?
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Budgeting & Forecasting › The Master Budget

How does the master budget support scenario and sensitivity analysis?

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Answer

When the master budget is modeled with linked assumptions and drivers, management can flex key inputs (sales volume, price, cost rates, payment timing) to see the impact on profit, cash, and the balance sheet under different scenarios (best/base/worst). This tests resilience, informs contingency plans, and identifies the most sensitive assumptions.
Real-world example Flexing the sales assumption down 15% in the model shows whether the business still stays cash-positive.

Common follow-ups: Why link assumptions in the model? | What does sensitivity analysis reveal?

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All 34 The Master Budget questions