Capital Budget: What is capital budget, how is it prepared? Know details
Under the capital budget, first of all further financial planning is done for the firm.
Project benefits and further plans are evaluated through the capital budget.
The uncertainty of the market is also taken into account in the process of capital budgeting.
New Delhi. Only a few days are left for the Union Budget to be presented. In such a situation, talks related to the budget are happening everywhere. Making a budget is very important, whether it is the budget of the house, of the company or of the country. Because from this further activities are determined and controlled. While discussing about the budget, you must have heard about the Capital Budget at some time or the other. Here we are discussing about the same.
Capital budgeting is a process of using management tools to plan and control the activities of any company. Through this, project benefits and further plans are also evaluated.
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What is capital budget?
In any company, a practical analysis of the source of cash or finance coming in and spending it for a project is done through the capital budget. Under the capital budget, first of all further financial planning is done for the firm. It is very important to move the company forward. Apart from this, the role of capital budget is also very important in meeting the target of development and expansion of the company.
Why is capital budget made?
The capital budget includes the estimation of a large amount of capital and its expected profit of any company. That’s why it is very important to make capital budget. Capital budget contains complete details of capital i.e. capital and cash. Any plan requires a stable finance in which capital budget plays an important role. Apart from this, the uncertainty of the market is also taken into account in the process of capital budget, which makes it easy to estimate.
How is capital budget prepared?
Capital budget is prepared under a long process. First of all, a project is prepared in it, then it is taken forward. In this process, important steps like increasing production, adding new products, cutting costs are taken. Apart from this, the work of analyzing and evaluating the project, arranging funds and monitoring the projects is also included in the capital budget.
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Tags: Budget, budget session, business news, business news in hindi, Finance Minister Nirmala Sitharaman, Nirmala Sitharaman
FIRST PUBLISHED : January 28, 2023, 13:15 IST