Reference no: EM132774813

Healthcare managers rely on the information in financial statements to make financial decisions. By calculating various financial ratios, they can learn more about how the organization is performing, not only from year-to-year, but also in comparison to its peers.

Recall that fixed budgeting is structured to represent expected activity for the next year depending on historical records. In contrast, flexible budgeting adjusts expected expense levels to correspond to the actual volume of sales realized during the budgeting period. Zero-based budgeting begins with a "zero" base or budget, and managers and department heads must justify all items. Incremental budgeting uses the previous period's generated budget as a starting point to which incremental volumes are added to generate the actual/current period's budget.
How might the choice of budgeting technique impact an organization's performance? How might the nature of the organization and its revenue sources affect which budgeting technique it employs? When might it make sense for an organization to change its budgeting technique?