Capital Budgeting Introduction - Accounts and Finance for Managers

The capital budgeting is one of the important decisions of the financial management of the enterprise. The decisions pertaining to the financial management of the firm are following:

financial management of the firm

Why the capital budgeting is considered as most important decision over the others?

The capital budgeting is the decision of long term investments, which mainly focuses the acquisition or improvement on fixed assets. The importance of the capital budgeting is only due to the benefits of the long term assets stretched to many number of years in the future. It is a tool of analysis which mainly focuses on the quality of earning pattern of the fixed assets.

The capital budgeting decision is a decision of capital expenditure or long term investment or long term commitment of funds on the fixed assets.

Charles T. Horngreen “A long-term planning for making and financing proposed capital outlays”.


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