Financial Planning and Analysis (FP&A) Systems

Flashcards covering key concepts related to Financial Planning and Analysis (FP&A) systems and the budgeting process.

Financial Planning and Analysis (FP&A)

A system that helps managers assess a company's future and evaluate performance against goals.

Master Budget

A comprehensive financial plan that collects all operational plans to produce a financial picture of the organization's anticipated results.

Budget

A detailed plan, expressed in quantitative terms, specifying resource acquisition and use over a period.

Planning

The process of outlining what resources are needed and how they will be used.

Communicating and Coordinating

Essential functions of the budgeting process to ensure managers are aware of other departments' plans.

Operational Budgets

Budgets developed from the sales budget that detail the execution of operations to meet demand.

Capital Budget

A budget for acquiring capital assets like buildings and equipment.

Cash Receipts Budget

A budget that provides information on expected cash inflows based on sales and other revenue sources.

Cash Disbursements Budget

A budget predicting cash outflows based on the timing of scheduled expenses.

Activity-Based Budgeting (ABB)

A budgeting method that uses activity-based costing principles to forecast resource needs based on planned activities.

Sales Forecasting

The process of estimating future sales, which is crucial for budgeting accuracy.

Budgetary Slack

The intentional overestimation of expenses or underestimation of revenues to create a buffer in the budget.

Participative Budgeting

A budgeting process that involves employees in setting budget goals, leading to greater commitment.

Budgeted Financial Statements

Financial statements that forecast the expected financial results of the organization's operations for the budget period.

Nonprofit Organization Budgeting

A budgeting approach for nonprofits that focuses on program budgets rather than sales budgets for profit.

Behavioral Impact of Budgets

The psychological effects that budgeting processes can have on employees' motivation and performance.

Financing Budget

A budget that projects cash flow to manage the cash needs necessary to finance an organization's operations.

Performance Evaluation

The assessment of individual and organizational performance based on budgeted versus actual results.