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cost of capital,financial leverage,capital budgeting appraisal methods,ABC analysis,ratio analysis and cash flow statements.
The three types of financial management decisions include capital structure, capital budgeting and working capital. They are designed to answer the main source of capital used to run the firm.
Cash flow rather than net income is used in capital budgeting analysis because the primary concern is with the amount of actual dollars generated. For example, depreciation is subtracted out in arriving at net income, but this non-cash deduction should be added back in to determine cash flow or actual dollars generated.
As capital budgeting involve decision making which is for long term time period that's why time value of money imprecations are included while calculating capital budget and that's why present value of actual cash flows are used rather the real value of cash flows.
A good example of incremental budgeting is like that used by governments. A government can simply look at the previous year's budget and decide to make greater allocations to each major cost such as education or military.
cost of capital,financial leverage,capital budgeting appraisal methods,ABC analysis,ratio analysis and cash flow statements.
discuss the various methods adopted for a capital budgeting decision.
Foreign capital budgeting requires the use of foreign cash flows and local tax rates, but U.S. inflation rates and U.S. dollars at the current exchange rates can be used.
Capital budgeting limitations are as follows:-It has long term implementations which can't be used in short term & it is used as operations of the business. A wrong decision in the early stages can affect the long term survival of the company. The operating cost gets increased when the investment of fixed assets is more than required.Inadequate investment makes it difficult for the company to increase its budget & the capital.Capital budgeting involves large number of funds so the decision has to be taken carefully.Decisions in capital budgeting are not modifiable as it is hard to locate the market for capital goods.The estimation can be in respect of cash outflow and the revenues or saving & costs attached which are with projects.
Yes it is the different names which are used interchangibally for the same process name.
Activity based budgeting is a technique that focuses on costs of activities or cost drivers necessary for production and sales. Such an approach facilitates continuous improvement.Conventional capital budgetingConventional: Based on or in accordance with general agreementCapital budgeting is the planning process used to determine whether an organization's long term investments such as new machinery, replacement machinery, new plants, new products, and research development projects are worth pursuing. It is budget for major capital, or investment, expenditures.
The three types of financial management decisions include capital structure, capital budgeting and working capital. They are designed to answer the main source of capital used to run the firm.
The three types of financial management decisions include capital structure, capital budgeting and working capital. They are designed to answer the main source of capital used to run the firm.
Cash flow rather than net income is used in capital budgeting analysis because the primary concern is with the amount of actual dollars generated. For example, depreciation is subtracted out in arriving at net income, but this non-cash deduction should be added back in to determine cash flow or actual dollars generated.
As capital budgeting involve decision making which is for long term time period that's why time value of money imprecations are included while calculating capital budget and that's why present value of actual cash flows are used rather the real value of cash flows.
See the following Wiki topic: http://en.wikipedia.org/wiki/Capital_budgeting
A good example of incremental budgeting is like that used by governments. A government can simply look at the previous year's budget and decide to make greater allocations to each major cost such as education or military.