Operating Budget Template

Operating Budget Template

This operating budgetOperating BudgetAn operating budget consists of revenues and expenses over a period of time, typically a quarter or a year, which a company uses to plan its operations. Download the Free Excel Template. The monthly budgeting template has a column for each month and totals to be the full year annual figures template helps you prepare your monthly and annual revenue, costs, and expenses budget.

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An operating budget consists of all revenuesSales RevenueSales revenue is the income received by a company from its sales of goods or the provision of services. In accounting, the terms "sales" and and expenses over a period of time (typically a quarter or a year) which a company, government, or organization uses to plan its operations.  An operating is prepared in advance of a reporting period as a goal or plan the business expects to achieve.

Components of an Operating Budget

The main components of an operations budget are outlined below.  Each business is unique and every industry has its nuances, but these items are general enough to apply to most industries.

#1 Revenue

Revenue is usually broken down into its drivers and components.  It’s possible to forecast revenue on a year-over-yearYoY (Year over Year)YoY stands for Year over Year and is a type of financial analysis used for comparing time series data. It is useful for measuring growth and detecting trends. basis, but usually, more detail is required by breaking revenue down into its underlying components.

#2 Variable costs

After revenue, variable costsVariable CostsVariable costs are expenses that vary in proportion to the volume of goods or services that a business produces. In other words, they are costs that vary are typically deduced.  These costs are called “variable” because they depend on revenue, and are often calculated as a percentage of sales.

#3 Fixed costs

After variable costs are deducted, fixed costs are usually next.  These expenses do not vary as much with changes in revenue and are mostly constant, at least within the time frame of the operating budget.

#4 Non-cash expenses

An operating budget often includes non-cash expensesNon-Cash ExpensesNon cash expenses appear on an income statement because accounting principles require them to be recorded despite not actually being paid for with cash. , such as depreciationDepreciation MethodsThe most common types of depreciation methods include straight-line, double declining balance, units of production, and sum of years digits. and amortizationAmortizationAmortization refers to the process of paying off a debt through scheduled, pre-determined installments that include principal and interest.

5 Non-operating expenses

Non-operating expenses are those that fall below Earnings Before Interest and Taxes (EBITEBIT GuideEBIT stands for Earnings Before Interest and Taxes and is one of the last subtotals in the income statement before net income. EBIT is also sometimes referred to as operating income and is called this because it's found by deducting all operating expenses (production and non-production costs) from sales revenue.) or Operating IncomeOperating IncomeOperating income is the amount of revenue left after deducting the operational direct and indirect costs from sales revenue..

#6 Capital costs in an operating budget

Capital costsHow to Calculate CapEx - FormulaThis guide shows how to calculate CapEx by deriving the CapEx formula from the income statement and balance sheet for financial modeling and analysis. are usually excluded from an operating budget.  The term operating refers to a statement of operations (income statement) which does not include capital expenditures.

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