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 ?
He began managing Comerica's Corporate Development, Strategy and Capital Planning division in 2016, where he is currently responsible for corporate development activities, long-term strategic planning, corporate pricing oversight, venture capital investments and the related warrant portfolio, capital planning, resolution planning, model development, and credit risk review.
While the Federal Reserve has already published capital planning supervisory expectations that are tailored to the size and complexity of these firms, the proposal would reinforce the Federal Reserve's less stringent expectations for these less systemic firms, which are generally engaged in traditional banking activities.
Although DBTC accounts for only a small proportion of its parent group's business the Fed assessed its capital planning and stress testing practices based on the standards applied to the largest US banking group's given Deutsche Bank's large US operations.
European banks have vowed to enhance capital planning after two major banks failed the US Fed's stress tests.
Capital planning complexity is exacerbated by the fact that most companies have several finance and cross-business unit participants who all utilize manual, non-integrated spreadsheets for the planning process.
Through its capital planning efforts, VA has taken steps to realign its real property portfolio from hospital based, inpatient care to outpatient care, but a substantial number of costly projects and other long-standing challenges also remain.
When repair, renovation, acquisition, or new-building needs become critical, emergency capital planning is called to the rescue.
As with past practice, publishing this set of guidelines officially launches the higher education capital planning and budgeting process for fiscal years 2009-2014.
The second type of program is a capital planning and asset management system (CPMS), a technology used to track "inventory." Databases hold detailed information about buildings, their square footage, and the ways the space is used.
As a first step toward meeting this demand, GFOA recently created the Committee on Economic Development and Capital Planning, whose appointed mission is "to assist finance officers to become knowledgeable participants in planning, evaluation, and execution of community/economic development and capital issues through the drafting and promotion of policies, procedures, and recommended practices."
Capital planning decisions for reinvestments have more or less implicitly assumed that the existing asset base will be sustained regardless of competitive pressure and margin erosion, and hence the remaining life of the assets.
Capital planning, or creating a capital financing plan, is a disciplined effort at assessing the current and projected physical needs of a property, establishing the costs of maintaining or modernizing it, and creating a strategic plan for addressing those needs within financial constraints.

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