Definition of Capital budgeting:
The determination of how much manufacturing equipment needs to be utilized by the company.
Capital budgeting is the process a business undertakes to evaluate potential major projects or investments. Construction of a new plant or a big investment in an outside venture are examples of projects that would require capital budgeting before they are approved or rejected.
As part of capital budgeting, a company might assess a prospective project's lifetime cash inflows and outflows to determine whether the potential returns that would be generated meet a sufficient target benchmark. The capital budgeting process is also known as investment appraisal.
How to use Capital budgeting in a sentence?
- I was worried because I had failed at capital budgeting before and I was being given a second chance to see if I could do it.
- You should be able to predict how much you will have for your capital budgeting so that you can make the right decisions.
- The process involves analyzing a project’s cash inflows and outflows to determine whether the expected return meets a set benchmark. .
- The major methods of capital budgeting include discounted cash flow, payback, and throughput analyses.
- Capital budgeting is used by companies to evaluate major projects and investments, such as new plants or equipment. .
- You should try and fully know what your capital budgeting powers are so that you do not go over them.
Meaning of Capital budgeting & Capital budgeting Definition