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Capital Budgeting

 Self-Paced Overview

Summary of Capital Budgeting

Capital Budgeting is an extremely important aspect of a company's financial management. Although capital assets usually comprise a smaller percentage of a company's total assets than do current assets, capital assets are long-term. Therefore, a company that makes a mistake in its capital budgeting process has to live with that mistake for a long period of time.

Capital Expenditure

An expenditure that is expected to benefit a company for a period of time longer than a year; usually much longer.

Capital Budgeting

Total process of generating, evaluating, selecting and following up on capital expenditures.

Motivations for Investments/Expenditures:

  • Replacement
  • Expansion
  • Modernization
  • Strategic

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