Capital Budgeting Training Course

Capital budgeting is an integral financial planning process used to determine whether long-term investments will yield positive returns and align with corporate strategy. Much like performing an investment appraisal, capital budgeting helps organizations analyse the merits of key spending initiatives such as the expansion of facilities, the development of new product lines, or any other significant capital investments. An investment’s viability is assessed by comparing the its potential benefits against the costs associated with developing and implementing it. This is done through the use of quantitative assessment techniques such as Net Present Value, Profitability Index, Internal Rate of Return and Discounted PayBack Period. Financing for the chosen investment is then incorporated into the organization’s operating budget and funded according to priority. The capital budgeting process, if executed correctly, can help an organization identify and pursue projects with the highest potential for success and avoid making poor investment and strategic planning decisions.