Question

Is it important for a company to follow a strict budget even though they may be experiencing phenomenal profits? Do you think that there will be a bias towards greed when creating the budget for this company? Explain.

How does management greed influence budget decisions?

Answer 1

Solution:

Truly, when an organization is encountering marvelous benefit most organizations will dependably attempt and 'relax' their financial plan, this can cause an extensive issue, for example, the benefit not be accurately reinvested into said organization.

Marvelous benefit once in a while happens over a significant lot of time they are frequently in 1-multi month spells though spending plans are normally quarterly at the most implying that on the off chance that you are encountering incredible benefit it is nearly ensured to be fleeting (aside from if its an imposing business model market)

The downturns are normal and the economy is recurrent. The organization is positive today however it might go down later. In this manner, making and following a strict spending plan regardless of whether the organization is making colossal benefits ought not be considered as predisposition towards covetousness.

It causes the organization to get readied for the downturns by keeping a top on costs through strict spending plan notwithstanding when the organization is encountering marvelous benefits.