Abstract
A well-structured budget serves as the backbone of financial planning, enabling firms to anticipate potential financial risks, allocate resources efficiently, and align their operational goals with market realities. However, many manufacturing firms, particularly in developing economies, fail to implement robust budgeting systems, resulting in financial mismanagement and under-performance. Hence, the study examined the effect of budgeting on the financial performance of manufacturing firms in Ogun State, employing a quasi-experimental research design. The population of the study consisted of 12 manufacturing companies located in Ogun State and listed under the industrial goods sector in Nigeria. From this population, five companies were selected based on predefined criteria. The data were analysed were gathered from the accounts of the concerned Industrial companies, covering a period of 5 years (2019 – 2023). The study used multiple regression Ordinary Least Square method to evaluate the hypotheses and analyse the data. The result of the analysis showed that Sales Budget (P= 0.0066 < 0.05, ß1 = 0.124303) and Cash Budget (P= 0.0074 < 0.05, ß1 = 2.071471) both had a significantly positive effects on ROA of manufacturing companies in Ogun State, while Operating Cost Budget had a significantly negative effect on ROA of manufacturing companies in Ogun State (p= 0.0043 < 0.05, ß2 = - 2.979281). The conclusion was that budgeting contributed positively and significantly to the financial performance of manufacturing companies in Ogun State. The study recommends that manufacturing companies in Ogun State focus on aligning their Operating Budgets with their overall financial goals.
Keywords: Budget, Sales budget, Cash budget, Operating cost budget, Financial performance, Return on asset