Paper Example on Comparing Top-Down vs Bottom-Up Budgeting: Which Is Better?

Comparing top-down vs bottom-up budgeting: which is better?

A stock is described as a share in the ownership of a particular company. It represents the claim(s) on the earnings and savings of a company. For instance, if one acquires more stock, his ownership of the company increases and become greater

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Which is better, top down or bottom up budgeting?

A top-down budgeting approach involves setting the budget without the participation of the ultimate budget holder in the budget process. On the other hand, bottom-up budgeting approaches the ultimate budget holder to participate in setting the budget actively. It is often referred to as participative budgeting. The bottom-up budgeting approach is better because it results in the ownership of the budget thus improved motivation of the budget holder. Again, it encourages commitment and understanding of the manager. Communication between various departments is also enhanced.

Why do people buy the stock when stocks are risky, and savings are FDIC insured?

A stock is an investment, and the concept of risk is usually inherent in investing, and that is the reason why they cannot be insured.

What is an example of a stock overreacting to news and how might you benefit from such news?

An example of the stock overreacting is panic selling due to bad news. The pros of this panic selling are that it helps in finding the bottom line for the establishment of a new play that is long term.

What is the difference between debt financing and equity financing?

Debt financing refers to the borrowing of money mainly for asset acquisition. Sometimes it is referred to as financial leverage.

Equity financing, on the other hand, involves the increase in the stakeholder's equity for asset acquisition. The outstanding shares drastically increase because of the rise in additional stock.

Which is better from the perspective of the company seeking funding, debt financing or equity financing?

Debt funding often has numerous advantages over equity financing. For instance, in debt financing, the lender lacks absolute control over your business. The relationship with the lender ends upon loan repayment.

How are interest rates determined on business loans?

Banks usually charge higher interest rates than depositors are paid so that they can make profits.

What is a balance sheet?

A balance sheet is a financial statement that is used by accountants and business owners to show the financial position of the company as at a particular date. It shows the assets, liabilities and the business capital within a specific point in time.

What is an income statement?

The income statement is the financial statement that is used to report the company's financial performance within a particular period of accounting.