What is the purpose of a master budget?

The purpose of a master budget is to provide a comprehensive overview of an organization's financial plans for a specific period of time, typically one fiscal year. It is a detailed plan that outlines the company's expected sales, expenses, revenues, capital expenditures, cash flow, and other financial metrics.

The master budget plays a crucial role in helping an organization achieve its financial goals by providing a framework for decision-making, resource allocation, and performance measurement. It serves as a guide for managers to plan and execute their operations effectively, and as a benchmark against which actual results can be compared and evaluated.

In addition, the master budget helps organizations to identify potential problems and take corrective action before they become major issues. By monitoring actual performance against budgeted numbers, managers can identify areas of weakness and implement changes to improve future results.

Overall, a master budget provides a roadmap of a company's financial goals and strategies and helps ensure that everyone in the organization is working together towards the same objectives.