7/26/2019 jntuk FM 3rd unit by Gangadhar U

1/20

7/26/2019 jntuk FM 3rd unit by Gangadhar U

2/20

CAPITAL BUDGETING

The total amount ofmoney invested in a business togenerate income is known ascapital.

Capital:

The word Capitalrefers to long-term sources offunds.

7/26/2019 jntuk FM 3rd unit by Gangadhar U

3/20

Budget:

Budget is a

statement. It is an estimation ofthe revenue and epenses over a

speci!ed future period of time.

7/26/2019 jntuk FM 3rd unit by Gangadhar U

4/20

Budgeting:

Budgeting is aprocess.This means budgeting is numberof activities performed in order to

prepare a budget. In a business" thebudgeting for operations willinclude the following. #reparing estimates of future

sales. #reparing estimates of future

cash collections anddisbursements.

7/26/2019 jntuk FM 3rd unit by Gangadhar U

5/20

#reparing estimates of futureday-to-day activities of theorgani$ation.

%ummari$ing the estimates intoan income statement andbalance sheet.

7/26/2019 jntuk FM 3rd unit by Gangadhar U

6/20

Capital Budgeting:

&Capital Budgeting is

a long-term planning for making and!nancing proposed capital outlays.'

-------- Charles T.

(orngren

7/26/2019 jntuk FM 3rd unit by Gangadhar U

7/20

Future benefits will occur to the firm over a series of years

Features of Capital Budgeting:

The exchange of current funds for future benefits.

The funds are invested in long-term assets

7/26/2019 jntuk FM 3rd unit by Gangadhar U

8/20

Significance of Capital Budgeting:

1. Involvement of Heavy Funds

2. Longterm in!uen"e

#. Ca$ital %udgeting de"isions are irreversi%le

&. 'ost di("ult in 'a)ing

7/26/2019 jntuk FM 3rd unit by Gangadhar U

9/20

Process of capital udgeting decisions:

Ideageneration

*valuation+ro,e"t-ele"tion

Finan"ing

Im$lementation

eview

7/26/2019 jntuk FM 3rd unit by Gangadhar U

10/20

7/26/2019 jntuk FM 3rd unit by Gangadhar U

11/20

7/26/2019 jntuk FM 3rd unit by Gangadhar U

12/20

/I0I/*/ /*CI-I-

7/26/2019 jntuk FM 3rd unit by Gangadhar U

13/20

+3T F +FIT4 5HICH I-/I-TIB6T*/ 3'7 TH*-H3*HL/*- I- 85 3-/I0I/*/

/I0I/*/:

7/26/2019 jntuk FM 3rd unit by Gangadhar U

14/20

)*+I,ITI,:

9/ividend is adistri%ution to shareholdersout of $rots or reservesavaila%le for this $ur$ose.;----Institute of Charted ccounts of

India.

7/26/2019 jntuk FM 3rd unit by Gangadhar U

15/20

T/#*% +

)I0I)*,):

7/26/2019 jntuk FM 3rd unit by Gangadhar U

16/20

7/26/2019 jntuk FM 3rd unit by Gangadhar U

17/20

7/26/2019 jntuk FM 3rd unit by Gangadhar U

18/20

7/26/2019 jntuk FM 3rd unit by Gangadhar U

19/20

7/26/2019 jntuk FM 3rd unit by Gangadhar U

20/20