Finance for managers essay Example | Topics and Well Written Essays - 1250 words

Finance for managers - Essay Examplethither are generally no hassles when owned capital is employed for executing budgetary plans. barely problems germinate on use of debt capital. These problems of debt financing are as down the stairs3. Financial leverage or gear mechanism of the capital employed affect future funding for the channel. For example during periods of depressions the entities will find difficulties in ski tow capital through issuance of equities.On basis of study conducted by Catherine Stenzel and Joe Stenzel (page 82)2, it may be spy that irrespective of model of the budget adopted, budgets normally incorporate three mistakes that limit the scope and decision fetching abilities of the entities. Those three mistakes are as underIt is seen that budgets do non align resources to strategic objectives of the firm. Budgets do not reveal the business strategies. Logically the budgets should translate the strategic goals into actionable operations in quantitative ter ms. But this does not happen. Budgets and strategic objective some time appear far apart in prep the use of resources. Budgets are constructed keeping in mind the resources in hand. There is no planning under budgetary figure out to create resources to meet strategic objectives.Entities declare mission statements and strategic objectives enthusiastically in big way. It is seen that during budgeting, very few so called flaccid budgets, that are presently in operations, care for business plans and plan activities to achieve those strategic goals.In words of Catherine Stenzel and Joe Stenzel one final flaw that can avoid budgeting relevance and lead to flaccid budget centers on parochial claims to resources. That is to say resources under budgetary process are allocated on competitive basis and not as per preferences set out in the strategic objectivity.Conventional budgets do not describe methods for arriving at budget proposals or at allocation of funds. The methodology