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Capital budgeting practices in different countriesindustrial corporations - Essay Example

High school
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Finance & Accounting
Pages 25 (6275 words)
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USA being a highly developed nation uses the most sophisticated techniques within their firms. The paper will discuss the capital budgeting techniques used in the Chinese and Indonesian firms and will highlight the similarities and the dissimilarities with future implications. …

Extract of sample
Capital budgeting practices in different countriesindustrial corporations

In today’s world of complex business process, corporate capital budgeting is one of the most important and critical decisions faced by the financial managers. In businesses individuals invests large sums of money which generate cash flow benefit over a period of more than one year. This is the crux of capital expenditures. The goods on which capital expenditures are made include purchasing of new equipments, acquiring of new technologies and that of launching research and development programs and so on. Along with these capital expenditures, a huge volume of cash outlays are involved with significant implications on the future values of the company. Analysis of capital expenditures is a crucial dimension in the business sphere. In this respect concept of capital budgeting (CB) can be introduced. In simple terms it is a business practice utilized for planning the acquisition of long term investments. The prime factor included in capital budgeting is that the organization or the company which builds and starts to use in one year will be highly useful in the future years (Finkler, 244).
The importance of capital budgeting is immense as it includes decisions for the future profitability of the companies. Now this technique varies across geographical borders and difference exists in a stark manner within the corporations of developed and developing countries. Developed countries like United States of America exercise thorough scientific analysis associated with the capital budgeting techniques. ...
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