Dc 6

docx

School

St. John's University *

*We aren’t endorsed by this school

Course

2370

Subject

Finance

Date

Nov 24, 2024

Type

docx

Pages

Uploaded by ahmedmushfiq4

I can definitely understand the complexities that you touch on regarding different variables including such as crews, weather, and other unforseen variables. I do feel that you your position not actually being held responsible for innaccuracy etc. takes away from the overall experience to some extent. It's funny that you mention having a lawyer present because getting things in writing definitely helps but doesn't necessarily fix anything when things go south. Snow removal is a hugely difficult problem to forecast for effectively as the when and how much changes every winter for north dakota and the cost is typically pretty absurd. 1. Purpose: - Operational Budget: Focuses on day-to-day expenses and revenues associated with the regular operations of a facility. It covers short-term expenses like salaries, utilities, maintenance, and supplies. - Capital Budget: Deals with long-term investments in assets. It includes expenditures for acquiring or upgrading major physical assets like buildings, equipment, or vehicles. 2. Time Horizon: - Operational Budget: Typically covers a one-year period and is more focused on the immediate future. - Capital Budget: Spans multiple years and is concerned with long-term planning and investment. 3. Nature of Expenditures: - Operational Budget: Involves recurring expenses necessary for daily operations. - Capital Budget: Involves one-time, significant investments in assets that have long-term value. 4. Examples: - Operational Budget: Salaries, utilities, rent, office supplies, maintenance costs. - Capital Budget: Purchase of new equipment, construction of a new facility, major renovations. 5. Flexibility: - Operational Budget: Typically more flexible and subject to adjustments based on short-term needs. - Capital Budget: Less flexible, as it involves substantial, long-term commitments. 6. Funding Sources: - Operational Budget: Usually funded from the organization's operating revenues. - Capital Budget: Often requires external funding sources like loans, bonds, or equity. 7. Impact on Financial Statements: - Operational Budget: Impacts the income statement directly by affecting revenues and expenses. - Capital Budget: Appears on the balance sheet as it involves changes in assets, liabilities, or equity. Which is More Important to the Facility and Why? The importance of operational and capital budgets depends on the context and the specific needs of the facility. Both budgets play crucial roles, but their significance can vary based on the facility's current stage, goals, and financial position. Ultimately, the balance between operational and capital budgets is essential for a facility's overall health. While operational budgets keep the facility running in the short term, capital budgets lay the foundation for future growth and development. The importance of one over the other can shift depending on the facility's strategic priorities, stage of development, and industry dynamics. In many cases, both budgets are integral components of a comprehensive financial plan. The importance of each budget depends on the facility's specific circumstances, goals, and industry dynamics. Striking a balance between operational and capital budgets is crucial for the facility's overall financial health. Both budgets contribute to a comprehensive financial plan, ensuring that the facility not only meets its immediate needs but also invests in its future resilience and prosperity.

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