How should multi-period budgeting across quarters with differing growth rates be approached?

• A. Use a rolling forecast with quarterly updates, applying growth rates and seasonality, and adjust as new data arrives.
• B. Use a static annual budget without updates
• C. Use only quarterly growth rates without updating
• D. Base budget and growth budget are fixed across quarters

Answer: (D)

Dynamic, rolling forecasts are the way to handle budgeting across quarters with different growth rates. This approach updates projections every quarter, applying growth assumptions and seasonal factors for each period and then revising those projections as actual results come in. That continual adjustment keeps the plan aligned with reality and allows you to reflect quarter-specific growth patterns, variances, and seasonality.

Static or fixed approaches fall short because they don’t capture how performance and demand can shift from quarter to quarter. A static annual budget misses seasonal swings, and applying growth without updating ignores feedback from real data. Fixing budgets for base and growth across all quarters prevents recognizing changes in trends or seasonality. By contrast, a rolling forecast provides the flexibility and responsiveness needed to accurately model multi-period budgets with differing quarterly growth.