Capital Budgeting

Presented by Solanki Sarkar

Roll no:-11900122155
CSE Dept/ 2nd Year/ 3rd Sem
 Content
• Introduction
• Procedure of Capital Budgeting
• Factors influencing
• Methods
• References
 Introduction
Capital Budgeting is concerned with allocation of the firm’s scarce financial
resources among the available market opportunities. The consideration of
investment opportunities involves the comparison of the expected future
streams of earnings from a project with immediate and subsequent streams
of expenditure for it
 Procedure of Capital Budgeting
In capital budgeting process.,, main points will be needed of implementing
immediate plans, how much money will be needed of implementing
immediate plans, how much money is available for its completion and how
are the available funds going to be assigned to various capital projects under
consideration
 Process
1. Organization of Investment Proposal
2. Screening the Proposals
3. Evaluation of Projects
4. Establishing Priorities
5. Final Approval
6. Evaluation
 Factors influencing Capital Budgeting
1. Business Risk
2. Company’s Tax Exposure
3. Financial Flexibility
4. Management Style
5. Growth Rate
6. Market Conditions
 Methods of Capital Budgeting
Traditional methods
Payback period
Accounting rate of return method
Discounted cash flow methods
Net present value method
Profitability index method
 Significance of Capital Budgeting
The significance of effective capital budgeting cannot be overstated, as it
empowers businesses to prioritize projects that promise the highest returns
and contribute to sustainable growth.
However, it's important to acknowledge that no method is foolproof, and
decision-makers must account for uncertainties and external factors that
could impact project outcomes.
 Conclusion
In conclusion, capital budgeting is a dynamic process that requires a blend
of financial expertise, strategic insight, and risk management acumen. By
employing rigorous analysis and staying attuned to market dynamics,
businesses can make confident investment decisions that pave the way for
innovation, growth, and sustained success.
 References
• https//:Investopedia.com
• https//:En.Wikipedia.org
• https//:extension.istate.edu
• https//:quickbooks.inuit.com