capital budgeting


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Capital budgeting

The process of choosing the firm's long-term assets.

Capital Budget

A plan for a company's capital expenditures. Capital expenditures are payments made over a period of more than one year. They are used to acquire assets or improve the useful life of existing assets; an example of a capital expenditure is the funding to construct a factory. Making a capital budget must account for the potential profitability of the plans involved. Calculating the net present value or the internal rate of return are two methods for determining a capital budget.

capital budgeting

Corporate evaluation of long-term investment proposals, generally by means of discounting estimated future cash flows.

capital budgeting

the process of planning and controlling CAPITAL expenditure within a firm. Capital budgeting involves the search for suitable investment opportunities; evaluating particular investment projects; raising LONG-TERM CAPITAL to finance investments; assessing the COST OF CAPITAL; applying suitable expenditure controls to ensure that investment outlays conform with the expenditures authorized; and ensuring that adequate cash is available when required for investments. See INVESTMENT APPRAISAL, BUDGETING.

capital budgeting

the planning and control of CAPITAL expenditure within a firm. Capital budgeting involves the search for suitable INVESTMENT opportunities; evaluating particular investment projects; raising LONG-TERM CAPITAL to finance investments; assessing the COST OF CAPITAL; applying suitable expenditure controls to ensure that investment outlays conform with the expenditures authorized; and ensuring that adequate cash is available when required for investments. See INVESTMENT APPRAISAL, DISCOUNTED CASH FLOW, PAYBACK PERIOD, MARGINAL EFFICIENCY OF CAPITAL/INVESTMENT.
References in periodicals archive ?
Capital budgeting is the planning, evaluation and selection of investment projects that have yield in long term period.
This article provides an overview of the capital budgeting process.
Shapiro's most recent finance textbook represents an introductory overview of the capital budgeting problem, i.
The need for relevant information and analysis of capital budgeting alternatives has inspired the evolution of a series of models to assist firms in making the "best" allocation of resources.
An investigation of existing texts shows that a number of differences exist in the treatment of debt for capital budgeting purposes in each discipline.
Internalizing a service in a staff-model health maintenance organization that is currently being performed by contracted external providers is an issue that needs to be carefully considered and should be part of the capital budgeting process.
As the first step in doing that, we'll have to take the states' capital budgeting scheme one step further.
The annual capital budgeting effort is painful for hospitals, which have been forced to develop budgets with inaccurate or out-of-date information using labor-intensive processes," said Nik Fincher, senior director of capital asset services for VHA.
John Vogt, Capital Budgeting and Finance: A Guide for Local Governments provides comprehensive, detailed, and practical information for small- and medium-size local governments about how to plan and finance capital projects.
This course describes the decision points that support capital budgeting within an organization, and continues to explore how a range of techniques (including CVP, NPV, payback, IRR, and ARR) can be used to conduct short- and long-term project evaluations within this process.
Capital budgeting is a fundamental part of the budgetary process at the municipal level.
Army Medical Command, the State of Missouri and Sisters of Mercy Health System have used VFA solutions to maintain accurate data about their property, create cost-effective capital projects, streamline the capital budgeting process, increase long-term utilization of assets, and reduce capital asset costs over time.

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