Guide to Analysing Companies

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BROKER
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ensure best practice and high standards of professionalism. (See
dealer.)
Budget: a method of worrying before you spend instead of afterwards.
Anon
Budget
A plan or estimate of revenue and expenditure for a specific
period in the future. In a balanced budget, revenue and expen-
diture are equal.
In many large companies, budgets are produced annually,
with income and expenditure broken down into monthly (or
even weekly) estimates that take into account economic and in-
dustrial cycles. A budget starts with estimates of sales and
income, followed by estimates of the costs of labour, materials,
administration, production, research, distribution and so on re-
quired to secure that level of sales.
National budgets do the same for countries. In this case, gov-
ernment spending departments usually bid for the money they
reckon is needed to deliver the commitments laid down by the
government as a whole. A country has a budget deficit when ex-
penditure exceeds revenue and a budget surplus when esti-
mated expenditure is less than estimated revenue.
capital budgets are compiled for periods of more than a
year. They include estimates of the future level of capital ex-
penditure, and of any borrowing required to meet it.
In general the art of government consists of taking as much money as
possible from one part of the citizens to give to the other.
Voltaire
Budget account
See account.
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Building society
A type of mutual institution that grew up in industrial towns
in the UK in the 19th century (and from which many, such as
Bradford, Burnley, Halifax, Leeds and Leicester, took their
names). Building societies were designed initially to do little
more than take in short-term savings and put them out as
long-term loans (or mortgages) for house purchase. In
recent years, however, they have been allowed to compete with
banks, offering money-transmission services and loans for
things other than house purchase. In return, banks have en-
croached on the building societies’ traditional turf, marketing
mortgages to their own customers. Some building societies have
abandoned their mutual status (that is, being owned by their de-
positors) and have become banks, with their shares listed on the
stockmarket. Traditionalists claim that this undermines their
ability to offer more competitive rates of interest on mort-
gages and savings products because they must now make a
profit for their shareholders. Modernists retort that the dynam-
ics of the market (such as a bank’s size, cost of funds and so on)
have a greater influence on their cost structure and therefore on
their ability to offer competitive rates to savers and borrowers
alike.
Bull
A person who expects the price of a security (or of a securi-
ties market as a whole) to rise. The opposite therefore of a bear.
Bulls will buy shares now expecting to be able to sell them
later at a higher price and at a profit. Bulls who are losing their
nerve are known as stale bulls.