Defining Variance Report
A Variance Report is a comprehensive document that summarizes the differences or variances between actual results and the budgeted amounts of a company. It provides an analysis of how much a company has gone above or below their predetermined budget.
The Variance Report is an essential tool for assessing a company’s financial performance. It helps managers identify areas of their business that are underperforming, overperforming, or according to plan.
This report contains various data points that provide insight into a company’s financial health, including revenue, expenses, profit margins, and cash flow. By comparing actual numbers to the budget, managers can evaluate whether they have effectively allocated resources and identify areas where they need to adjust their spending or investment decisions.
Moreover, the Variance Report may also include an explanation of the reasons for the variances. This analysis can help management make informed decisions and take corrective actions to bring actual results in line with the budgeted amounts.
In conclusion, Variance Reports are crucial tools for companies to monitor their financial performance and ensure that their business operations are matching their budget and strategic direction.
« Back to Glossary Index