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| Budgeting |
| Budgeting in the Real World |
| Forecasting Sales |
| Forecasting Costs |
| Preparing Budgets |
| Budget Analysis |
| Sensitivity Analyses |
| Actual Income |
| Actual Expenditure |
Page 7 of 9
Budgeting
6. Sensitivity Analyses
6.1 Using forecasting software, it is easy to analyse the potential effects of changes to your budget assumptions.
- You can see the effects on your cashflow, profits and balance sheet.
6.2 As a minimum, carry out sensitivity analyses on different levels of sales.
- Typically, you might work with optimistic, pessimistic and most-likely scenarios.
6.3 Analyse the effects of any changes to significant costs.
6.4 Check the impact of any other significant risks to your business.
- For example, if 30 per cent of your turnover comes from one customer, what would happen if they stopped buying from you?
Labels: Reduce Costs
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