Budget Analyst

What is a Budget Analyst?

Budget Analyst is a professional data-oriented person. He organizes and allocates various financial resources (Income from business/profession, interest income from bank deposits, profits from trading in stocks or shares) by monitoring each spending on an estimation basis and then produces probable surplus/deficit from the said calculations.

Budget-Analyst

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Types of Budget Analyst

They may be involved in various budgets in the organization. He may perform the role of only a specific area. Likewise, multiple components are as under:

Types of Budget Analyst

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#1 – Financial Budget Analyst

The main job is to look for probable (expected) profit that will be left with the organization after considering all sorts of expenses.

#2 – Production Budget Analyst

This job is concerned with what costs are involved in the production of an item (i.e., Finished Goods). They get a list of all the components required for production from the production manager of the organization. They also need information about all the overheads involved in the production process. Finally, they arrive at Gross ProfitGross ProfitGross Profit shows the earnings of the business entity from its core business activity i.e. the profit of the company that is arrived after deducting all the direct expenses like raw material cost, labor cost, etc. from the direct income generated from the sale of its goods and services.read more from each product

#3 – Division/Branch Budget Analyst

They do the same as a financial budget analyst does. But they are concerned only with one branch of the organization, and not the whole organization. This person is a branch manager.

#4 – Cash Flow Budget Analyst

The main job is to estimate the net cash flows from the operationalCash Flows From The OperationalCash flow from Operations is the first of the three parts of the cash flow statement that shows the cash inflows and outflows from core operating business in an accounting year. Operating Activities includes cash received from Sales, cash expenses paid for direct costs as well as payment is done for funding working capital.read more, investments & financing activities of the organization. They have a responsibility to allocate the cashflows to different activities & to arrive at net cashNet CashNet Cash represent the company's liquidity position and is calculated by deducting the current liabilities from the cash balance reported on the company’s financial statements at the end of a particular period. Analysts and investors examine it to have a better understanding of the company's financial and liquidity position.read more that will be left with the organization.

Examples of Budget Analyst

Below are a few examples.

#1 – Financial Budget

Budget Analyst Example 1

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#2 – Production Budget (Units to be Produced)

Budget Analyst Example 1-1

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#3 – Cash Budget

Cash Example 1-2

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Advantages of Budget Analyst

Some of the benefits are as follows:

Disadvantages of Budget Analyst

Some of the disadvantages are as follows:

  • An underlying assumption for expenses can deviate from actual figures. If the deviation is minimum, then it is accepted. If the deviation is high enough, it may result may be horrible.
  • High estimation may result in disapproval of the decision to manufacture a product. It may mislead the decision-making process.

Limitation

Important Points

  • Flexibility is working is required because estimates are bound to change during the year.
  • Regular updating of knowledge is required for effectiveness.

Conclusion

They need to have comprehensive knowledge. He needs to consider a lot of things before finalizing the work. He is treated as support-hand of the Top Managers of the organization. Thus, he is bombarded with responsibility for the accuracy (of facts), reasonableness (of assumptions), and completeness (of all activities required the process for which the budget is to be prepared).

This article has been a guide to what is a budget analyst. Here we discuss types and examples of budget analysts with a balance sheet along with advantages and disadvantages. You can learn more about financing from the following articles –