Capital Budgeting in Mnc
TOPIC: CAPITAL BUDGETING IN MNC’s
INDEX
1. Meaning of Capital Budgeting …………………. 3
2. Nature of Capital Budgeting …………………….3
3. Procedure of Capital Budgeting………………….3
4. Significance of Capital Budgeting ………………5
5. Basics of Capital Budgeting……………………..6
6. Alternative Capital Budgeting Framework……....8
7. Issues in Foreign Investment Analysis…………..9
8. Summary and Conclusion………………………16
9. References………………………………………17
CAPITAL BUDGETING IN MNC
Meaning of Capital Budgeting
Capital expenditure budget or capital budgeting is a process of making decisions regarding investments in fixed assets which are not meant for sale such as land, building, machinery or furniture. The word investment refers to the expenditure which is required to be made in connection with the acquisition and the development of long-term facilities including fixed assets. It refers to process by which management selects those investment proposals which are worthwhile for investing available funds. For this purpose, management is to decide whether or not to acquire, or add to or replace fixed assets in the light of overall objectives of the firm. The terms capital expenditure are associated with accounting. Normally capital expenditure is one which is intended to benefit future period i.e., in more than one year as opposed to revenue expenditure, the benefit of which is supposed to be exhausted within the year concerned.
Nature of Capital Budgeting
Nature of capital budgeting can be explained in brief as under Capital expenditure plans involve a huge investment in fixed assets. Capital expenditure once approved represents long-term investment that cannot be reserved or withdrawn without sustaining a loss. Preparation of coital budget
INDEX
1. Meaning of Capital Budgeting …………………. 3
2. Nature of Capital Budgeting …………………….3
3. Procedure of Capital Budgeting………………….3
4. Significance of Capital Budgeting ………………5
5. Basics of Capital Budgeting……………………..6
6. Alternative Capital Budgeting Framework……....8
7. Issues in Foreign Investment Analysis…………..9
8. Summary and Conclusion………………………16
9. References………………………………………17
CAPITAL BUDGETING IN MNC
Meaning of Capital Budgeting
Capital expenditure budget or capital budgeting is a process of making decisions regarding investments in fixed assets which are not meant for sale such as land, building, machinery or furniture. The word investment refers to the expenditure which is required to be made in connection with the acquisition and the development of long-term facilities including fixed assets. It refers to process by which management selects those investment proposals which are worthwhile for investing available funds. For this purpose, management is to decide whether or not to acquire, or add to or replace fixed assets in the light of overall objectives of the firm. The terms capital expenditure are associated with accounting. Normally capital expenditure is one which is intended to benefit future period i.e., in more than one year as opposed to revenue expenditure, the benefit of which is supposed to be exhausted within the year concerned.
Nature of Capital Budgeting
Nature of capital budgeting can be explained in brief as under Capital expenditure plans involve a huge investment in fixed assets. Capital expenditure once approved represents long-term investment that cannot be reserved or withdrawn without sustaining a loss. Preparation of coital budget