Capital Budgeting Process

Capital budgeting process is the procedure that the organizations use in order to ensure well being of the organization and to foresee where the organization is going to be in the near and far future. The most common steps in capital budgeting process are:


1. Brainstorming: In this first and most important step investment ideas are brainstormed. This ideas came come from withing organization as well from outside of organization. 

2. Project analysis: The second step involves projecting the flow of the cash and organization's profitability. 

3. Capital budgeting planning: In this step planning and prioritizing a project is very important. Organizations must consider and organize profitable contracts that will fit into strategic element of the organization. 

4. Performance monitoring: This final step involves comparing and contrasting results to post audit. For example, if the revenues and examples are parallel with the prediction that was made (Investment101, 2012, para.2). 

Capital budgeting process needs involvement of all departments in the organization. Also this process may involve outside organization people as well. Some organizations may also hire third party professionals when they do capital budgeting process. 

Reference:

Investment101. (2012). Capital budgeting process. Retrieved on May 3, 2015 from http://www.myinvestment101.com/capital-budgeting/capital-budgeting-process.html