![]() Income forecasts should be prepared while keeping in consideration the growth objectives.4. ![]() Resources and needs of each department.3. Obtaining data from departmental managers should identify 2. Participation of managers is essential to consider their point of view while establishing budgets.2. Nordstrom should decide on budget committee and the participants that should be involved in the budget setting process. Thus it is necessary to prepare effective budgets in order to establish strategies that are important in highly competitive markets.Budgeting Plan1. If the company determines the costs and expenses in advance, it will help them in making pricing decisions and in implementing the cost control policy. Effective budgets reflect the plans and cash flows of the company that makes it easier for the creditors to decide whether or not to grant debts (Kemp, 2003).Įffective budgets assist the management in determining the costs with accuracy. Banks and trade creditors usually examine the financial stability of the company to ensure that their debts are well secured by the assets of the company. In case of any discrepancy, actual results can then be examined to identify the potential issues.Financial outcomes of effective budgetingBudgets are highly important in obtaining debts from the financial institutions. The company as a standard benchmark against which it can compare the actual results could use high-level budgets. Nordstrom Ltd should also prepare budgets to keep the track of the performance of departmental managers and the responsibilities assigned to them. Preparing budgets can help the company managers by providing them the planning tool that could assist in the implementation of future strategies. ![]() Budgeting of Budgeting Aims of Budget Preparation Nordstrom Ltd should prepare budget in order to identify and achieve the specific financial objectives of the company.
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