Capital Budgeting Practices in Nepalese Manufacturing Companies
Date
2021
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Department of Management
Abstract
Capital budgeting is the process of planning and controlling the strategic (long term)
and tactical (short term) expenditure for expansion and contraction of investment in
operating (fixed) assets. Capital budgeting decisions are involved with the use of cash
now and get back the investment over a period longer than a year. Evaluating such
decisions requires determining the investment and its resulting cash flows. Investments
provide future cash flows through additional revenues and costs, and through cost
saving critical to capital budgeting is that most, if not all, of the numbers used in the
analyses are estimates. Capital investment decisions play vital role for the achievement
of strategic plan of organizations.
The main objective of this study is to investigate the capital budgeting practice of
manufacturing companies in Nepal. To achieve this objective, primary data was
collected using self-administered questionnaire from ten manufacturing companies.
The finding of the study showed that the Nepalese manufacturing companies have been
practicing capital budgeting for the long term investment project. Most of the Nepalese
manufacturing companies are making investment plan through executive decision and
some of the companies are practicing both financial analysis and executive decision.
Most of the Nepalese manufacturing companies are facing time consuming difficulty in
using capital budgeting followed by unavailability of data and lack of manpower.
Capital budgeting in Nepalese manufacturing companies is still evolving and will
continue to do so in the future. So far, they are trying to adopt various tools and
techniques to cope with the future expected opportunities and challenges to be faced
due to the accession of globalization.
Key Words: Cash Forecasting, Capital Investment, and Project Identification, Strategic
Planning.
Description
Keywords
Cash Forecasting, Capital Investment, Strategic Planning