SSC Assignment 2021 7th Week
Finance and Banking English Version
Two
Learning
২০২১
সালের এস.এস.সি পরীক্ষার্থীদের ৭ম সপ্তাহের অ্যাসাইনমেন্ট
Subject: Finance & Banking
Subject Code: 152 Level: SSC
Assignment Serial
Number: 5
Assignment Title:
Analyzing the relationship of the success and existence of any
business organization with capital budgeting
a.
Concept of capital budgeting
Generally speaking, capital budgeting is a long-term
investment decision made by a business entity in the hope of getting cash flow
for a long time. Capital budgeting is a process involved in the long-term
investment decision of the organization.
Through this process, he analyzes the potential profitability of the organization by estimating the income and expenditure of fixed assets such as land, building, machinery, furniture, etc., replacing these assets,
business expansion such as: installation of new machines, modernization of
production methods and other long term investment decisions. Investment
decisions are made accordingly.
For example, three brothers Munni, Riya and Muktar start separate businesses. For some time now Munni has been thinking of buying a fridge for his confectionery.
Six
months ago Riya started his business with a photocopy machine. Considering the
additional demand, he has now decided to purchase another photocopy machine.
Muktar, on the other hand, is thinking of purchasing the necessary furniture (wheelchairs and mirrors) and haircut scissors and perfume to start a modern salon business.
The decision to buy confectionery
refrigerators, photocopiers and saloon wheelchairs and haircut scissors here is
a long-term investment decision.
An evaluation process of financing is essential to determine
whether such a long-term investment decision will be profitable for the
business organization or not at all.
Capital budgeting is an evaluation process that makes it easy
to make a profitable investment decision. In this case, the income and
expenditure of each investment decision or project has to be estimated income-expenditure.
At the end of the estimate, the net cash flow or net profit
of these decisions or projects is determined. Money earned from sales means
income and expenses
Refers to other costs including raw material costs, sales
costs and depreciation. From income After deducting expenses, net profit is
obtained and after deducting tax from net profit, it is available Net profit.
Adding depreciation with profit again gives cash inflow.
This inflow is compared to the initial outflow or cash outflow. If the inflow is greater than the outflow, the investment appears to be profitable and is considered acceptable otherwise the investment decision was rejected. This process is called capital budgeting process is.
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