Why are budgets considered a tool for managers?

Budgets are considered a crucial tool for managers because they help assess progress towards strategic goals. By establishing a budget, managers create a financial framework that outlines expected revenues and expenditures for a specific period. This framework allows them to compare actual performance against budgeted figures, providing valuable insights into how well the organization is moving towards its strategic objectives.

Budgets also facilitate the identification of variances and trends, enabling managers to make informed decisions based on financial data. This ongoing assessment allows for adjustments to ensure that resources are aligned with the organization's goals, ultimately leading to improved financial performance and strategic alignment.

In contrast to the other options, budgets do not guarantee financial success, nor are they rigid targets that must be met without flexibility. They also play a significant role in strategic planning, making the notion that they are unnecessary for this purpose incorrect.