Keep Your Head in the Clouds and Your Feet on the Ground
137formulating estimates within short and long periods of time. As a result,
conceptualizations in financial management are based on our perceptions
of FUTURE which can be regarded as a very general, non-specialist and
seemingly universal concept. We generally conceptualize FUTURE as the
TIME that will come and this conceptualization is based on one of the
most fundamental conceptual metaphors – TIME IS SPACE.
The first of a series of chronologically sequenced procedures making
part of financial management can be described as PLANNING. The
following stages in the process include ORGANIZING, CONTROLLING
and MONITORING financial resources. Thus, the idea of forecasting
FUTURE is encapsulated in the meaning of the lexical item plan and its
specialist extension in the term budget. A budget is defined as a
“quantitative expression of a plan for a defined period of time”. It may
include planned sales volumes and revenues, resource quantities, costs and
expenses, assets, liabilities and cash flows.
Not only is the macrocategory of financial management conceptualized
as a linear and staged process, but also budgeting process as one of its
constituting parts is perceived as a LINE with precisely allocated in time
future events (e.g. budget line, capital market line). A LINE, on the other
hand, can be associated with an experientially more basic concept of
PATH. As a consequence, FUTURE is conceived of as a road lying ahead
of us, divided into distance units often termed as ‘monthly/quarterly
annual periods’, approximative expressions ‘in the short/medium/long run
(term)’ or by reference to very specific dates. Anticipation of FUTURE is
possible because of PAST experiences and the assumption that the road
that lies ahead of us is a continuation of the road that we have already
gone through. Thus, FUTURE is conceived as a projection of the PAST
(the so called historical financial data). As a result, in financial
management the analysis of historic information is used to provide the
basis for future decisions, for example an investment appraisal to justify
buying a new piece of equipment (Tennent 2008: 20). However, the
number of factors that must be taken into consideration by a financial
manager may vary every time a new budget or investment plan is created.
This conceptualization can be illustrated by the following quotations:
The capital expenditure decision must be taken with much thought. Not
only does it lead the business into new territory, but sunk costs cannot be
reversed (Patterson 2011a: 80).Cash flow projections are typically developed as part of the budget
process, so that possible shortages or surpluses can be anticipated