Question
Can someone please put a comment in those two post? 1,,,,,,,,,,,,Capital budgeting decision making is one of the key phases of financial management because it
Can someone please put a comment in those two post?
1,,,,,,,,,,,,Capital budgeting decision making is one of the key phases of financial management because it will help managers to pick projects that will increase the value of the company in the future and it will also help them to generate viable cash flows.
The knowledge of capital budgeting is one of the important aspects for managing suppliers and borrowers as they will try to control their credit cycle by applying time value of money and they will also try to sustain their relationship. This will help them to evaluate different types of non-financial choices. Capital budgeting techniques will help managers to stabilize the overall performance of the company in the longer term and it will also reduce the risk associated with businesses by integrating the rates of return in the decision-making process.
The basics of capital budgeting are important for manager in every area of organization because it will help them to choose projects and utilize their productivities for maximization of value. It will help managers to consider the time value of money in decision making and it will also help them to maximize their overall value by considering cost and revenues and selecting utilization of Financial resources by maximizing the value of the organization.
2,,,,,,,,,,,,,,,,,,,,,Capital budgeting is defined as the process to determine the longevity of an organization according to its capitalization structure from a long-term perspective of an outlook. In this process, the potential in projects and investments that are incorporated is what's being evaluated. What it means to understand the basics of capital budgeting is to " identifying the cash in ows and cash out ows rather than accounting revenues and expenses owing from the investment" (Iowa). Why the basics of capital budgeting are important is because this technique of examination overall gives organizations results that will inform them on how much they are able to move forward with projects and resources- making it a great tool for critical decision making. It also informs on the likelihood of returns by period. This all answers if a project should or shouldn't be invested in. "Capital budgeting is important because it creates accountability and measurability. Any business that seeks to invest its resources in a project without understanding the risks and returns involved would be held as irresponsible by its owners or shareholders" (Pinkasovitch).
At this point, it should be well understood that capital budgeting's greatest use is to evaluate projects and investments to determine if it will reach a return expectation. Outside of finance, kinds of decisions which need a working knowledge of capital budgeting are about business such as tracking progress or cash flow.
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