Capital Budgeting Practices of Corporate Enterprises in India : An Empirical Study
DOI:
https://doi.org/10.33516/rb.v40i0.21-33pKeywords:
Capital Budgeting, Discounted Cash Flow Analysis, Strategic Investments, Financing Decision, Liquidity.Abstract
Capital budgeting is critically important to every corporate house operating in the era of competitive market environment. This article reports the result of a survey of capital budgeting of thirty companies listed on NSE. The results show that today nearly 83 percent of corporate houses use sophisticated DCF methods for economic evaluation of their investment proposals. It also shows that corporate houses today instead of relying on the theoretical superiority of a single, they use multiple methods and combine science with practical business prudence to be sure that the related investment proposal is safe to the company. Financing and capital budgeting decisions, being interlinked and inter-dependent, have been simultaneously studied in this paper to trace the presence of any link between sources of finance and choice of appraisal methods. The study also reveals that the corporate houses today give considerable emphasis on corporate strategy as a decision variable in choosing a longterm investment proposal.Downloads
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