Budgeting is the process of utilizing the cash which you are bringing in and to plan for both short and long term. Budgeting proves useful for success of any enterprise or business activity. Budgeting is of advantage for the public to make their decision consciously keeping in view their income and expenses.

Profitability Index (PI)

Profitability index is a ratio that identify and compares the relationship between the total costs involved in the project and the profit returned from that project. The ratio of profitability index can be shown in the form of formula as under:- Profitability Index Formula

Simple Rate of Return Method

Simple Rate of Return Method: Learning Objectives: Compute the simple rate of return for an investment project. Definition and Explanation: The simple rate of return method is another capital budgeting technique that does not involve discounted cash flows. The method is also known as

Screening Decisions and Preference Decisions

Screening Decisions and Preference Decisions: Learning Objectives: Define, explain and give examples of screening and preference decisions. Capital budgeting decisions fall into two broad categories: Screening decisions. Preference decisions. Screening Decisions – Definition and Explanation: Screening decisions relate to whether a proposed project meets

Budgeting and Planning

After studying Budgeting and Planning article you should be able to: Understand why organizations budget and the processes they use to create budgets. Prepare a sales budget, including a schedule of expected cash receipts. Prepare a production budget. Prepare a direct materials budget, including

Cash Budget | Cash Budgeting

Cash Budget | Cash Budgeting: Learning Objectives: Define and explain a cash budget. What is the purpose of a cash budget How to prepare a cash budget. Definition and Explanation: Cash budget is a detailed plan showing how cash resources will be acquired and

Capital Budgeting Decisions

Learning Objectives: Evaluate the acceptability of an investment project using the net present value method. Evaluate the acceptability of an investment project using the internal rate of return method. Evaluate an investment project that has uncertain cash flows. Rank investment projects in order of