Operating Budget
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Operating Budget
The operating budget contains the revenue and expenditure generated from the daily business functions of the company; see . Edriaan Koening (N.D.What is Corporate Budgeting? chron.com It concentrates on the operating expenditures, i.e.: cost of goods sold (COGS), the cost of direct labor and direct materials that are tied to production; as well as the overhead and administration costs tied directly to manufacturing the goods and providing services. The operating budget will not, however, contain capital expenditures and long-term loans; for these see capital budgeting Capital budgeting in corporate finance is the planning process used to determine whether an organization's long term capital investments such as new machinery, replacement of machinery, new plants, new products, and research development project .... References Budgets {{econ-stub ...
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Revenue
In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business. Commercial revenue may also be referred to as sales or as turnover. Some companies receive revenue from interest, royalties, or other fees A fee is the price one pays as remuneration for rights or services. Fees usually allow for overhead (business), overhead, wages, costs, and Profit (accounting), markup. Traditionally, professionals in the United Kingdom (and previously the Repu .... This definition is based on International Accounting Standard, IAS 18. "Revenue" may refer to income in general, or it may refer to the amount, in a monetary unit, earned during a period of time, as in "Last year, Company X had revenue of $42 million". Profit (accounting), Profits or net income generally imply total revenue minus total expenses in a given period. In accountancy, accounting, in the balance statement, revenue is a subsection of the ...
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Investopedia
Investopedia is a financial media website headquartered in New York City. Founded in 1999, Investopedia provides investment dictionaries, advice, reviews, ratings, and comparisons of financial products such as securities accounts. Investopedia has more than 32,000 articles and reaches 20 million unique monthly viewers and posts paid advertisements as investing information. It is part of the Dotdash Meredith family of brands owned by IAC. Investopedia offers educational technology into day trading, asset management, foreign exchange markets, as well as financial educational courses. It also hosts a stock market simulator. Self-paced, online courses from expert instructors are available on Investopedia Academy. History Founding and early history Investopedia was founded in 1999 by Cory Wagner and Cory Janssen in Edmonton, Alberta. At the time, Janssen was a business student at the University of Alberta. Wagner focused on business development and research and development, w ...
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Chron
Chron may refer to: Science * Chronozone or chron, a term used for a time interval in chronostratigraphy * Polarity chron or chron, in magnetostratigraphy, the time interval between polarity reversals of the Earth's magnetic field Other * ''Chron'' (album), a 2014 album by Arve Henriksen * ''Houston Chronicle The ''Houston Chronicle'' is the largest daily newspaper in Houston, Texas, United States. , it is the third-largest newspaper by Sunday circulation in the United States, behind only ''The New York Times'' and the ''Los Angeles Times''. With it ...'', a newspaper whose website is Chron.com See also * Chrono (other) {{disambiguation ...
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Operating Expense
An operating expense, operating expenditure, operational expense, operational expenditure or opex is an ongoing cost for running a product, business, or system . Its counterpart, a capital expenditure (capex), is the cost of developing or providing non-consumable parts for the product or system. For example, the purchase of a photocopier involves capex, and the annual paper, toner, power and maintenance costs represents opex. For larger systems like businesses, opex may also include the cost of workers and facility expenses such as rent and utilities. Overview In business, an operating expense is a day-to-day expense such as sales and administration, or research & development, as opposed to production, costs, and pricing. In short, this is the money the business spends in order to turn inventory into throughput. On an income statement, "operating expenses" is the sum of a business's operating expenses for a period of time, such as a month or year. In throughput accounting, t ...
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Cost Of Goods Sold
Cost of goods sold (COGS) is the carrying value of goods sold during a particular period. Costs are associated with particular goods using one of the several formulas, including specific identification, first-in first-out (FIFO), or average cost. Costs include all costs of purchase, costs of conversion and other costs that are incurred in bringing the inventories to their present location and condition. Costs of goods made by the businesses include material, labor, and allocated overhead. The costs of those goods which are not yet sold are deferred as costs of inventory until the inventory is sold or written down in value. Overview Many businesses sell goods that they have bought or produced. When the goods are bought or produced, the costs associated with such goods are capitalized as part of inventory (or stock) of goods. These costs are treated as an expense in the period the business recognizes income from sale of the goods. Determining costs requires keeping records of g ...
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Fixed Costs
In accounting and economics, 'fixed costs', also known as indirect costs or overhead costs, are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be recurring, such as interest or rents being paid per month. These costs also tend to be capital costs. This is in contrast to variable costs, which are volume-related (and are paid per quantity produced) and unknown at the beginning of the accounting year. Fixed costs have an effect on the nature of certain variable costs. For example, a retailer must pay rent and utility bills irrespective of sales. As another example, for a bakery the monthly rent and phone line are fixed costs, irrespective of how much bread is produced and sold; on the other hand, the wages are variable costs, as more workers would need to be hired for the production to increase. For any factory, the fix cost should be all the money paid on capitals and land. Such fixed costs as buying machines and lan ...
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Capital Expenditure
Capital expenditure or capital expense (capex or CAPEX) is the money an organization or corporate entity spends to buy, maintain, or improve its fixed assets, such as buildings, vehicles, equipment, or land. It is considered a capital expenditure when the asset is newly purchased or when money is used towards extending the useful life of an existing asset, such as repairing the roof. Capital expenditures contrast with operating expenses (opex), which are ongoing expenses that are inherent to the operation of the asset. Opex includes items like electricity or cleaning. The difference between opex and capex may not be immediately obvious for some expenses; for instance, repaving the parking lot may be thought of inherent to the operation of a shopping mall. The dividing line for items like these is that the expense is considered capex if the financial benefit of the expenditure extends beyond the current fiscal year. Usage Capital expenditures are the funds used to acquire or upgra ...
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Long-term Liabilities
Long-term liabilities, or non-current liabilities, are liabilities that are due beyond a year or the normal operation period of the company. The normal operation period is the amount of time it takes for a company to turn inventory into cash. On a classified balance sheet, liabilities are separated between current and long-term liabilities to help users assess the company's financial standing in short-term and long-term periods. Long-term liabilities give users more information about the long-term prosperity of the company, while current liabilities inform the user of debt that the company owes in the current period. On a balance sheet, accounts are listed in order of liquidity, so long-term liabilities come after current liabilities. In addition, the specific long-term liability accounts are listed on the balance sheet in order of liquidity. Therefore, an account due within eighteen months would be listed before an account due within twenty-four months. Examples of long-term liabil ...
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Capital Budgeting
Capital budgeting in corporate finance is the planning process used to determine whether an organization's long term capital investments such as new machinery, replacement of machinery, new plants, new products, and research development projects are worth the funding of cash through the firm's capitalization structures (debt, equity or retained earnings). It is the process of allocating resources for major capital, or investment, expenditures. An underlying goal, consistent with the overall approach in corporate finance, is to increase the value of the firm to the shareholders. Capital budgeting is typically considered a non-core business activity as it is not part of the revenue model or models of most types of firms, or even a part of daily operations. It holds a strategic financial function within a business. One example of a firm type where capital budgeting is plausibly a part of the core business activities is with investment banks, as their revenue model or models re ...
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