Financial Glossary

Budget variance analysis

Definition

Budget Variance Analysis is the process of comparing actual financial results to budgeted figures to understand deviations and their causes. This analysis provides insights into financial performance and areas for improvement.

Related Services

Used in financial planning, corporate budgeting, management reporting, and cost control services. Companies employ this to ensure operational alignment with financial goals.

Problem and Application

Budget variances may occur due to market changes, unexpected costs, or inaccurate forecasting. Misinterpreting variances can lead to ineffective corrective actions. Proper analysis helps organizations adjust strategies, improve forecasting accuracy, and manage resources efficiently.

Conclusion

Budget variance analysis is an essential tool for financial oversight, enabling businesses to identify gaps, implement corrective actions, and maintain alignment with long-term financial objectives.