Budgeting and costing
Budgets and cash budgets, break-even point, variance analysis
What you will find in this section
The difference between the balance sheet and the budget, preparing an annual budget and a cash budget that prevents shortfalls, calculating the break-even point, and analyzing variances between actual and budget.
The difference between the balance sheet and the budget
In Arabic, the word mizaniya is used for two completely different things: a snapshot of what the business owns today, and a numerical plan for what it expects tomorrow. Learn the difference through a single example.
Budgeting and costingHow to prepare an annual budget for a trading business, step by step
Four linked budgets: sales, then purchases, then expenses, then cash. A complete numerical example for a trading business, broken down by quarter.
Budgeting and costingThe cash budget: avoid a deficit before it happens
A profitable business can still be unable to pay salaries. The cash budget reveals the critical month early, with an example of April, when Zakat and VAT fall due together.
Budgeting and costingBreak-even point: how much do you need to sell to cover your expenses?
A simple formula that tells you how many daily orders your restaurant needs to avoid a loss, and how the number changes if you raise prices or the rent goes up.
Budgeting and costingVariance analysis: comparing actual with budget and what to do with the result
A budget without follow-up is a forgotten sheet of paper. Learn how to calculate price and volume variances, why you need a flexible budget, and when a variance is worth investigating.