Capital Budgeting and Financial Analysis

Discussion: Capital Budgeting and Financial Analysis

Review at least 2 academically reviewed articles on capital budgeting and 2 articles on financial analysis and complete the following:

A. Write an annotated bibliography of each article.

B. Based on the articles you reviewed, discuss what you learned

C. In addition, discuss how a manager would use the concepts in the articles you reviewed in managerial decisions.

Use APA throughout. Please organize your discussion as listed above.

MAIN POST  -300 WORDS

3 REPLIES EACH – 200 WORDS EACH

REPLY – 1 (SHIVA CHARAN)

Capital budgeting is the process in which the organization invests the money on long term elements and it is also known as investment appraisal. These elements include the plant and machinery, land, project resources, and so on. These elements are the concepts that support human power on the assets that stay for a long time in the organization. The assets of capital budgeting are not sold. These assets will remain as long as the organization remains. The capital budgeting includes the firms of organizations, investment, and expenditure. The main purpose of capital budgeting is to increase the value of shares of the stockholders. Capital budgeting involves some methods that help to increase the profits for the business organization. These methods help to gain profits from the projects (Benallou & Aboulaich, 2017). The methods of capital budgeting help the flow of the amount from the projects which helps to reach the aim of the organization and fulfill the needs of the organization. Capital budgeting helps the organization to gain information about the value of certain elements and these elements include projects and investments. The capital budgeting gives a strategical plan of the inflow and outflow of resources that help the organization to set a benchmark (Malenko, 2019). 

Financial analysis is the process that gives an exact value of the economic trends. These economic trends help to set up financial policies that help to develop a long-term plan in the business organization. The financial analysis helps in identifying the projects of the business organization. It helps in analyzing the financial position of the business organization. These analyzing methods include a balance sheet, invoice statement, and flow of cash statement. Financial analysis helps to identify the position of the company. It helps in identifying the company’s strategies and also helps in developing new strategies to achieve the aims of the organization (Ermasova & Mikesell, 2019). The financial analysis helps the organization to access the quality of different firms that are obtained from financial statements. The organization could easily identify the upcoming risks by using financial analysis. The financial analysis helps to increase the quality of the firms of the stockholders. The financial analysis report is provided with all the information that is gathered from the organization and also helps in calculating the ratio of the business organization. The financial analysis report provides an overall view of the organization. The financial analysis report conducts and provides a risk assessment within the organization (Wang & Wu, 2018).

References

Benallou, O., & Aboulaich, R. (2017). Improving Capital Budgeting Through Probabilistic Approaches.    Review of Pacific Basin Financial Markets & Policies, 20(3), 1. https://doi.org/10.1142/S0219091517500187

Ermasova, N., & Mikesell, J. L. (2019). Public Capital Budgeting and Management: The Concept and Its Application in Three Important Federations. Public Finance & Management, 19(3), 175–199

Malenko, A. (2019). Optimal Dynamic Capital Budgeting. Review of Economic Studies, 86(4), 1747–1778. https://doi.org/10.1093/restud/rdy043

Wang, W. and Wu, Y., 2018. Why Are We Lagging Behind? An Empirical Analysis of Municipal Capital Spending in the United States. Public Budgeting & Finance, 38(3), pp.76-91.

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