Budgetary Slack

What is a 'Budgetary Slack'

A budgetary slack is the intentional allowance for extra expenditures in a future cash flow. Budgetary slack can take one of two forms: It can either underestimate the amount of income or revenue that will come in over a given amount of time, or overestimate the expenses that are to be paid out over the same time period.

BREAKING DOWN 'Budgetary Slack'

Budgetary slack is generally frowned upon by most accountants. This strategy effectively prevents budgets from working properly. It can even be unethical in some cases, such as when companies intentionally distort these figures in order to achieve certain accounting objectives.

RELATED TERMS
  1. Hiring Freeze

    A situation whereas an employer has temporarily put into place ...
  2. Capital Expenditure (CAPEX)

    Capital expenditure, or CapEx, are funds used by a company to ...
  3. Core Liquidity

    Cash and other financial assets that banks possess that can easily ...
  4. Cash Flow

    The net amount of cash and cash-equivalents moving into and out ...
  5. Price to Free Cash Flow

    A valuation metric that compares a company's market price to ...
  6. Cash Flow From Investing Activities

    An item on the cash flow statement that reports the aggregate ...
Related Articles
  1. Managing Wealth

    How Does Slack Work and Make Money?

    This on the rise Unicorn is an enterprise chat platform that aims to integrate all aspects of your work life on one simple interface.
  2. Personal Finance

    How Your Government's Budgetary Decisions Impact the Public Sector

    Issues facing the public sector are not unlike some issues facing America’s oldest and largest companies, but with larger and broader impacts.
  3. Investing

    Analyze Cash Flow The Easy Way

    Find out how to analyze the way a company spends its money to determine whether there will be any money left for investors.
  4. Investing

    Cash Flow From Investing

    Cash flow analysis is a critical process for both companies and investors. Find out what you need to know about it.
  5. Investing

    Cash Flow On Steroids: Why Companies Cheat

    Pressure to be the best can sometimes push corporations to cheat. Learn how they do it and how to spot it.
  6. Retirement

    The Essentials Of Corporate Cash Flow

    Tune out the accounting noise and see whether a company is generating the stuff it needs to sustain itself.
  7. Investing

    Fundamental Case Study: Is Amazon's Cash Flow Actually Solid? (AMZN)

    Review Amazon's cash flow situation, including its free cash flow yield, operating cash flow from organic growth and cash flow from debt financing.
  8. Managing Wealth

    Cash Flow Is King: How to Keep it Running

    Why is cash flow so important, and what steps can a business take to improve it?
  9. Investing

    Capital Expenditure Versus Revenue Expenditure

    Capital expenditures and revenue expenses have significant differences. Here's the difference between the two.
  10. Investing

    Operating Cash Flow: Better Than Net Income?

    Differences between accrual accounting and cash flows show why net income is easier to manipulate.
RELATED FAQS
  1. What is the difference between a capital expenditure and a revenue expenditure?

    Understand the difference between a company's capital expenditures and revenue expenditures, and how each expense appears ... Read Answer >>
  2. How should a company budget for capital expenditures?

    Learn the difference between capital expenditures and operational expenses, and discover the importance of budgeting for ... Read Answer >>
  3. What is the formula for calculating free cash flow?

    Read about some of the formulas for free cash flow, why investors perform cash flow analysis and what a high or rising cash ... Read Answer >>
  4. What is the difference between cash flow and revenue?

    Understand the difference between cash flow and revenue as they relate to corporate accounting and the financial evaluation ... Read Answer >>
  5. What are some examples of how cash flows can be manipulated or distorted?

    Read about some of the most common accounting techniques that can be used to manipulate the operating cash flow on a company's ... Read Answer >>
  6. Is it wise for a company to have heavy cash flow investing activities outside of ...

    Learn if it's wise for a company to have heavy cash flow from investing activities outside of its capital expenditures. Understand ... Read Answer >>
Hot Definitions
  1. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  2. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  3. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  4. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  5. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  6. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
Trading Center