Which of the following is an advantage of rolling budgets?

Rolling budgets are designed to provide flexibility and responsiveness to changing business conditions. By allowing for continuous updating based on recent events, rolling budgets enable organizations to adjust their financial plans regularly, reflecting more current data and aligning with the dynamic nature of the business environment. This aspect is particularly advantageous, as it helps businesses remain agile and relevant, facilitating better strategic decision-making.

As circumstances evolve—such as market fluctuations, changes in customer demand, or new opportunities—rolling budgets help organizations adapt their financial resources and forecasts accordingly, leading to better financial performance and planning.

The other options do not accurately represent the key benefits of rolling budgets. For instance, while preparation time may vary based on the specific processes an organization employs, rolling budgets typically require continuous input and evaluation, which may not necessarily reduce preparation time compared to traditional budgets. A long-term budget extending five years ahead is not a defining characteristic of rolling budgets, which usually focus on shorter-term, iterative planning. Lastly, regular managerial reviews remain essential in any budgeting approach to ensure that the organization is on track with its financial goals and can adjust strategies as needed.