“Capital budgeting is an important decision making area for the fin

1.	“Capital budgeting is an important decision making area for the finance manager.” Explain.
Answer» (a) Capital Budgeting (b) Importance of Financial Planning (1) It ensures adequate funds from various sources. (2) It reduces the uncertainty about the availability of funds. (3) It integrates the financial policies and procedures. (4) It helps the management to eliminate waste of funds and reduce cost. (5) It helps to achieve a balance between the inflow and out flow of funds and ensure liquidity. (6) It serves as the basis of financial control (7) It helps to reduce cost of financing to the minimum. (8) It helps to ensure stability and profitability of business. (9) It makes the firm better prepared to face the future.

“Capital budgeting is an important decision making area for the finance manager.” Explain.

Answer»

(a) Capital Budgeting

(b) Importance of Financial Planning

(1) It ensures adequate funds from various sources.

(2) It reduces the uncertainty about the availability of funds.

(3) It integrates the financial policies and procedures.

(4) It helps the management to eliminate waste of funds and reduce cost.

(5) It helps to achieve a balance between the inflow and out flow of funds and ensure liquidity.

(6) It serves as the basis of financial control

(7) It helps to reduce cost of financing to the minimum.

(8) It helps to ensure stability and profitability of business.

(9) It makes the firm better prepared to face the future.

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