Capital rationing refers to a condition where a firm is not in a position to invest in all profitable projects due to the constraints on accessibility of funds. It is a known fact that the financial resources are always inadequate and the demand for them far exceeds their availability. It is for this reason that the firm cannot take up [...]
Everything you need to know about the techniques of capital budgeting. Some of the techniques can be grouped in the two categories as mentioned below: 1. Non-Discounted Cash Flow Techniques: (a) Accounting Rate of Return Method (b) Payback Period Method; 2. Discounted Cash Flow Techniques: (a) Net Present Value Method (b) Internal Rate of Return Method (c) Profitability Index Method. [...]
Everything you need to know about the process of capital budgeting. Capital budgeting is a process by which companies assess how to fund operations and new ventures through movement and management of assets. This involves a series of actions or steps taken to achieve best possible returns. This process involves the selection of those new investment proposals presented to a [...]