# capital

Capital is the amount invested by owner in the business. Capital is in different forms such as assets, cash and intangible assets. Capital is also described as real capital and economic capital.

## Capital Expenditure

What is Capital Expenditure ? Capital expenditure can be defined as the amount of money or the amount of expense that a company uses to purchase, upgrade, improve or extend the life and the performance of its long term assets. Capital expenditure is usually

## Venture Capital Funding

Venture capital funding is a kind of financing in small and medium enterprises where investors invest their money in the venture having a chance of potential growth and seeks equity stakes in the business. This can also be referred to seed funding and the

## 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

## More About Capital and Revenue Expenditures

More About Capital and Revenue Expenditures: Capitalized or Deferred Revenue Expenditures: Where a certain revenue expenditure incurred is of such a nature that its benefit is likely to be spread over a certain number of years, or where it is of non-recurring and special

## Difference Between Capital and Revenue Expenditures

Difference Between Capital and Revenue Expenditures: Learning Objectives: What is the difference between capital and revenue expenditures. Following is the difference between capital and revenue expenditures. Capital Expenditures Revenue Expenditures 1 Its effect is long term i.e., it is not exhausted within the current

## Income Tax and Capital Budgeting Decisions

Income Tax and Capital Budgeting Decisions: Learning Objectives: Include income taxes in a capital budgeting analysis. In our discussion of capital budgeting decisions in this chapter, we ignored income taxes for two reasons. First, many organizations do not pay income taxes. Not-for-profit organizations, such

## 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

## Future Value and Present Value Tables

Future Value and Present Value Tables Future Value Tables: Table 1: Future Value of \$1 Table 2: Future Value of Ordinary Annuity  (Annuity in Arrear – End of Period Payments) Present Value Tables: Table 3: Present Value of \$1 Table 4: Present Value of

## Present Value and Future Value – Explanation of the Concept

Present Value and Future Value – Explanation of the Concept: Learning Objectives: Understand present value concepts and the use of present value tables. Compute the present value of a single sum and a series of cash flows. A dollar received now is more valuable

## Review Problem 2: Comparison of Capital Budgeting Methods

Review Problem 2: Comparison of Capital Budgeting Methods Lamer company is studying a project that would have an eight-year life and require a \$2,400,000 investment in equipment. At the end of eight years, the project would terminate and equipment would have no salvage value.

## Extended Example of Net Present Value Method

Extended Example of Net Present Value Method:   Difficulties Encountered in Process Costing Procedures: Learning objectives of this article: What are the difficulties or Limitations in a process costing procedure? Certain difficulties likely to be encountered in actual practice should be mentioned with regard

## 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 and Revenue Receipts, Payments, Profits and Losses

Capital and Revenue Receipts, Payments, Profits and Losses: Learning Objectives: Define and explain and give examples of capital and revenue receipts and payments? Define and explain and give examples of capital and revenue profits and losses? Contents: Capitalized and Revenue Receipts Capital and Revenue

## Capital Gearing Ratio

Capital Gearing Ratio: Definition and Explanation: Closely related to solvency ratio is the capital gearing ratio. Capital gearing ratio is mainly used to analyze the capital structure of a company. The term capital structure refers to the relationship between the various long-term form of

## Review Problem 1: Basic Present Value

Review Problem 1: Basic Present Value Computations: For each of the following situations is independent. Workout your own solution to each situation, and then check it against the solution: Situation 1: John has reached age 58. In 12 years, he plans to retire. Upon
1 2