What are the major benefits of budgeting? Contribution Margin (CM)

 

  1. What are the major benefits of budgeting?
  2. Contribution Margin (CM) Income Statement Profitability Analysis:
    • Analyze what your MOS% means. How is this meaning substantiated by your CM Income statement results for the different months? 
    • Net Profit Margin automatically becomes part of your Vertical Analysis (or common-sized percents) within your CM Income Statement. Analyze why Net Profit Margin % is different when comparing the different volumes each month? 
  3. Analysis of Profitability, Liquidity, Solvency of your business relative to benchmark
  • Describe the company and/or industry you are using as a benchmark for your business. Indicate the related strengths and/or limitations of using this as a benchmark.
  • In your original budget, evaluate your business’ profitability, liquidity, and solvency relative to your benchmark’s performance for those ratios in each category. Why might there be a significant difference between your performance and your benchmark’s performance in each category?