What is the significance of investment analysis in the capital budgeting process?

3 years ago
Financial Management

The capital budgeting process requires an estimate of future events to be translated into a schedule of cash flows. At a given point of time, a company may be having a number of alternative investment proposals and obviously the objective of the capital budgeting analysis is to obtain an indication of the value each might contribute to the company.

Before applying any method to evaluate the relative acceptability of a project it is necessary to analyse to components which affect cash flows related to the projects over the life of the project. The basic components of investment analysis are: 1 Amount of net capital investment, 2. Operating cash flows, 3. Choice of a horizon.

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Sanisha Maharjan
Sanisha Maharjan
Jan 18, 2022
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