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Capital Budgeting Problems: A solution through Accounting techniques
Pages 10 (2510 words)
In order to keep on delivering profits the business must keep on investing in different projects in order to improve their organizational capabilities. These investments improve the capabilities of the business to respond to the customer demands, the external contacts of business reduces the risks attached to the products, internal integration improve the productivity of organization continuous experimenting not only improve the value creation but also enhance the image of the organization in business.
Rather than that it is easier to the investment. This is due to the difficulty the future organization face in calculating the future benefits; most organizations normally do not undertake new investments.
These judgements can be undertaken if the assets are quantifiable. The benefits attached to the intangibles can only be judged by the educated senior executive of the organizations and investments in such projects can be made on the basis of the beliefs of the organizations heads. The investments in these projects should be formally budgeted on the other hand it is strongly recommended to undertake periodic reviews of the outcomes and benefits attached to these projects. With investment in value delivering projects it is also important to invest in organizational skills, and system since they affect the value.
"Management accounting is the design and use of accounting information systems to achieve the organisation's objectives by supporting decision-makers inside the enterprise. ...
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