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What is Capital Budgeting | Anamind

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Capital Budgeting is a process through which a business determines and evaluates long term investments or projects. Learn more about capital budgeting

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What is Capital Budgeting | Anamind

  1. 1. FAQs: What is Capital Budgeting Part - 4 Powerful Planning! Simplified
  2. 2. What is Capital Budgeting? Capital Budgeting is a process through which a business determines and evaluates long term investments or projects. Such as, purchase of machinery or purchase of new equipment or rebuilding existing one or new plants or investing in long term ventures, in order to obtain best returns on investments.
  3. 3. Various techniques used for Capital Budgeting are Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period (PBP), Accounting Rate of Return (ARR) and Profitability Index(PI). NPV is the present value of all after-tax cash flows. IRR is the discount rate that makes the present value of all future cash flows sum to zero. PBP is the number of years required to recover the original investment in the project.
  4. 4. Forecasts are different from budget because they do not reflect the wish of the company but the market reality. Forecasting helps companies identify the gaps with the budget before it become a reality so that they can do something to bridge the same. The bridging of it is the tactical planning where teams like marketing and sales get into action. ARR is rate of return on average bool value of assets. PI is the present value of project’s future cash flows divided by the initial investment.
  5. 5. To understand more about the capital budgeting, supply chain, planning and forecasting you may join our course on same
  6. 6. “A goal without a plan is just a wish.” ― Antoine de Saint-Exupéry
  7. 7. For better understanding on planning and forecasting, you may enroll to our full training Check the next slide >>
  8. 8. Thank You To learn more about ‘Business Planning and Forecasting’ enroll to full training at: http://bit.ly/grab-your-udemy-coupon

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