Factors Influencing Capital Expenditure Decisions



Are you Account and Finance Manager of Company who is responsible to spend money on capital expenditure or big asset buying or development or making same big assets, then this content will be useful for you. If you are reading it for academic purpose, then also sufficient because you are student and student must be curious to know the detail of each topic.

Following are the factors influencing capital expenditure decisions

1st Factor : Resource Limit 

Your Resource Limit affects your capital expenditure decisions. For example, you want to buy a machine of Rs. 10 Lakh but your total capital resource and debt resource is Rs. 5 Lakh, you will be unable to buy same capital expenditure. Yes, we new and new ideas like demanding venture capital, you can boost this limit


2nd Factor : Buy Back Money 

Every manager of company also thinks like a professional investor. Will same capital expenditure will fast buy back the money because professional investor wants to play with home money. So, its buy back of principle is far from other projects, manager can change the decision to invest in it. It will prefer to buy other projects.

3rd Factor : Return on Capital Expenditure

When we spend money on capital expenditure, we get the fixed asset. So, manager will be responsible to know advance return on its investment before investment. If this is giving very low rate, it will affect the decision of manager and manager may decide not to buy or buy less or do less capital expenditure in same project


4th Factor : Knowledge of Technical Aspects of Capital Expenditure


Capital expenditure decisions depends also the knowledge of technical aspects of same capital expenditure. For example, you have bought a machine for your company need but after technical advice, you need to buy 4 new machines to operate this machine. So, it may be out of your budget. So, instead buying this new 4 machines, you may plan to sell this and buy other advance technological machine.

5th Factor : Law Effect

Law can effect your capital expenditure decision. For example, you are starting a factory in any area where, there is not allow the machines which you will install, you may cancel this project due to legal barrier.

6th Factor : Compare Different Capital Expenditure

Whether, we buy or manufacture. Whether we rent or buy. These type of decisions will depends on the profitability and buy back of our own money. So, decision will change as per positive results in other project. If overall profitability is in manufacturing, we can leave the decision of buying same.

Reference

Financial Management eBook
.

$type=three$a=hide$cm=hide$s=hide$show=/2019/08/how-to-spend-money-intelligently.html$l=hide$c=9$d=

$type=three$a=hide$cm=hide$s=hide$show=/2019/08/how-to-buy-gold-from-paytm.html$l=hide$c=6$d=no

$type=three$a=hide$cm=hide$s=hide$show=/2013/06/tdr-vs-stdr.html$l=hide$c=30$d=no

$type=three$a=hide$cm=hide$s=hide$show=/2019/06/10-steps-to-become-better-investor.html$l=hide

Name

access account accountant Accounting accounting definitions accounting ebook Accounting education accounting procedure accounting process outsourcing Accounting Software advance advertising africa Amalgamation amendments announcements Annuity assets audit auditing Australia B.Com. balance sheet bank Bank reconciliation banking basic accounting BBA benefits best bill black money blog bloggers book keeping bookkeeping Branch Accounting - full tutorial budget Budget variance business businessman CA calculator canada capital capital budgeting career cash cash book cash flow statement Chiense children china class coaching coins college commerce commerce students company computer computer accounting conference Contact vinod kumar Control Your Spending corporate accounting cost cost accounting cost center cost centre CPA credit credit card cs currency data Debit and credit debit cards debt debtor degree depletion depreciation Diwali Messages documents dollar domain Downloads Dubai e-accounting earning education Education Loans email employee EPF ERP euromoney examination excel excise duty expenses facebook factor of loan fans feature fifo FII fiji finacle finance Financial financial accounting fire insurance flickr flow forensic forex formula france fraud free fun function fund GAAP GDP gdr germany gold goodwill goodwill accounting google google apps Google Adsense google apps google base google buzz google calendar Google docs google finance google fusion tables google talk govt. GST guide health Hindi Hindi Language history holding company How to treat FBT in Tally 9 HRA ICAI ICAWI ICICI Bank IFRS income income statement Income Tax India indian railway Indonesia inflation inflation accounting infographics information inspiration insurance insurance accounting Intangible interest international Internet Introduction of Tally 9 inventory investment investment in Shares invoice IT Japan Job costing journal entries Journal Entries eBook Help Kalculate keyboard kindle kuwait laptop law LBT learning lease lecture ledger leducation Leverage Analysis liabilities lifo linkedin loan logical point loss loss of profit M.Com. m.phil malaysia management accounting manual accounting manufacturing account market marketing mastercard material MBA MCA media migration mobile money ms word ms. excel multi currency in tally 9 Multicurrency Accounting mutual fund national security new and sacrifice ratio new york times new zealand news NGO nonprofit-accounting North Georgia Mountains NPV NSE odbc office oman online application online accounting Online Accounting Course otcei pakistan parents Partnership pay pal pdf Personal Finance pie chart pie chart of income pnb podcast ppf presentation price privacy policy prize money prof. vinod kumar profit profit and loss account project management provision purchase puzzles quickbooks Quote quotes quotes of svtuition rating agency ratio analysis RBI readers real estate rectification of errors remote control reports reserves responsibility accounting retirement revenue Revenue reserves review risk rupees salary sale saudi arabia saving sbi scholarship school SEBI security service tax share share trading Shares shri lanka singapore sms social accounting society solution South Africa stock stock exchange structure student students study subsidiary company svtuition swiss bank tally tally 9 Tally 7.2 Tally 9 Tally.ERP 9 tanzania tax Tax Accounting TDS teacher teaching technology test testimonial testimonials thailand tips trading trading on equity transaction trend trial balance truthfulness tuition twitter UAE UGC - NET Commerce UK United Arab Emirates university usa valuation VAT Video Voucher and vouching Wealth wikipedia working capital youtube
false
ltr
item
Accounting Education: Factors Influencing Capital Expenditure Decisions
Factors Influencing Capital Expenditure Decisions
https://1.bp.blogspot.com/-HurcdjOBvOY/Xhx7cJc_NVI/AAAAAAAAXVg/AmMqSxYJ0XIQ0Ojkw3-xt-UGp-kQ7zlPgCLcBGAsYHQ/s400/capital.png
https://1.bp.blogspot.com/-HurcdjOBvOY/Xhx7cJc_NVI/AAAAAAAAXVg/AmMqSxYJ0XIQ0Ojkw3-xt-UGp-kQ7zlPgCLcBGAsYHQ/s72-c/capital.png
Accounting Education
https://www.svtuition.org/2020/01/factors-influencing-capital-expenditure.html
https://www.svtuition.org/
http://www.svtuition.org/
http://www.svtuition.org/2020/01/factors-influencing-capital-expenditure.html
true
2410664366776677676
UTF-8
Not found any lecture VIEW ALL Continue reading Reply Cancel reply Delete By Home PAGES Lectures View All RECOMMENDED FOR YOU Category ARCHIVE SEARCH ALL Lectures Not found any lecture match with your request, please help to write it and send it to our email at vinod@svtuition.org for making this website free accounting and finance encyclopedia. Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock