All 34 The Master Budget questions
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Budgeting & Forecasting › The Master Budget

How do you validate/sense-check a completed master budget?

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Answer

Validation checks include: the budgeted balance sheet balances; key ratios (margins, liquidity, gearing) look reasonable and consistent with history/strategy; growth assumptions are achievable; cash never breaches facilities; and the statements articulate (profit flows to equity, cash to the balance sheet). Anomalies point to errors or unrealistic assumptions to revisit.
Real-world example A sanity check flags an implausible 40% margin jump, prompting a review of the cost assumptions.

Common follow-ups: What ratios do you sense-check? | What does 'articulation' mean here?

Cash Budgeting Variance Analysis The Master Budget
All 34 The Master Budget questions