Capital budgeting: a systematic review of the literature

Michelon, Paula de Souza; Lunkes, Rogério João; Bornia, Antônio Cézar

doi:10.1590/0103-6513.20190020

Cited by 10 publications

(6 citation statements)

References 46 publications

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“…The findings indicate that when the decisions for the CAPEX are properly taken then the profitability of the companies also increase. Such finding is consistent with earlier research (Ishtiaq et al, 2017;Michelon et al, 2020).…”

Section: Conclusion and Recommendationssupporting

confidence: 94%

“…Investing in non-current assets is a very crucial task since it affects profitability (Yohanes, Debela, & Shibru, 2018). The capital expenditure concept was first introduced in 1960's (Michelon, Lunkes, & Bornia, 2020). The capital investment decision taken today can enhance the firm's profitability in future that is why it is viewed as one of the most crucial financial management decisions (Ali, Rehman, Suleman, & Ntim, 2022;Amponsah-Kwatiah & Asiamah, 2020).…”

Section: Capital Expendituresmentioning

confidence: 99%

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The Impact of Investment Decisions on Firm Profitability of Non-Financial Sectors in Pakistan: Mediating Role of Sales Growth

et al. 2022

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Investment decisions within the organizations are critical for firm’s profitability and also have a long-term impact because many of these decisions are irreversible. Firms with limited funds can achieve impressive returns if their investments are well-planned. Therefore, the research objective is to determine the impact of investment decisions on firm profitability (earning per share) of non-financial sector (Communication, media industry, energy sector etc.) of Pakistan. For this purpose, data was collected for the period of 2011-2021 from the annual reports of non-financial companies which were listed in 100 index Pakistan Stock exchange. The quantitative research approach, longitudinal research design and panel data approach has been used in the study. The panel data results indicates that working capital management (WCM) indicators namely inventory turnover ratio (ITO), average collection period (ACP), average payment period (APP) and cash conversions cycle (CCC) have positive and significant effect on earnings per share. In the same vein, capital expenditure also have positive and significant effect on earnings per share and also has indirect effect through the mediating effect of sales growth which indicates partial mediation because the coefficient after mediation was lower as compared to the direct effect. Based on the findings, the research has contributed a body of literature in the extant literature along with the significant and mediating effect. Therefore, this study could be considered to be a pioneer study that could help the researchers to conduct their research in future. This study could also help to the managers and decisions makers to know about the importance of investment decisions to increase firm profitability.

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Section: Conclusion and Recommendationssupporting

confidence: 94%

Section: Capital Expendituresmentioning

confidence: 99%

The Impact of Investment Decisions on Firm Profitability of Non-Financial Sectors in Pakistan: Mediating Role of Sales Growth

et al. 2022

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“…The paper [26] discusses the advantages and disadvantages of the two approaches. The first approach is performance-based budgeting and the second approach is performance-based budgeting.…”

Section: Problem Statementmentioning

confidence: 99%

Using Bayesian Networks to Estimate the Effectiveness of Innovative Projects

Naumov

Voronenko

Наумова

et al. 2021

Lecture Notes in Computational Intelligence and Decision Making

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The paper proposes an application of Bayesian methodology to analyze the attachment effectiveness in the national economy. The methods for creation the BNs structure, their parametric learning, validation, and scenario analysis are examined. The research results show that at the highest level of capital investments, the financial activity result will be 48% more active, while the net profit indicator will rise by 8%. To make the profitability equal 100%, it is desirable for us to decrease the payback term by 15% and increase the level of net profit by 9%. This study can be useful for investors, managers, economists, financiers and other investment professionals. Keywords: Innovative projects• Attachment effectiveness • Bayesian networks • Validation • scenario analysis "What-if"

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“…The addition of fixed assets will generally affect the company's finances in the long term, because the capital that must be spent is quite large and there is uncertainty in the period of return of invested capital. Therefore, companies need to carefully consider the capital they have before making investment decisions [1]. Investment decisions that have been made also need to be evaluated to see whether the investment performance has been made in accordance with the initial objectives when the investment is planned.…”

Section: Introductionmentioning

confidence: 99%

Application of Capital Budgeting Method to Evaluate Investment Decisions on Additions to Fixed Assets at PT Hatten Bali

Pradnyawati¹,

Putrayasa²,

Sudiadnyani³

2021

JASAFINT

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This research was conducted to evaluate the investment decision to add fixed assets by PT Hatten Bali using the capital budgeting method. The results of this study are expected to be used as material for evaluating the application of the capital budgeting method in making investment decisions on fixed assets at PT Hatten Bali. The data used for this study were obtained from interviews and documentation and were analyzed using descriptive qualitative research analysis techniques with a case study approach. Based on the results of research using the capital budgeting method which consists of the method of calculating the payback period, net present value, profitability index, internal rate of return and average rate of return, all of which have shown a favorable results. From these results it can be concluded that the investment decision to add fixed assets in the form of distribution vehicles made by PT Hatten Bali can benefit the company in stable sales conditions and the application of capital budgeting methods can reduce the risk of errors or failures in making investment decisions and improve subsequent investment decisions.

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Capital budgeting: a systematic review of the literature

Cited by 10 publications

References 46 publications

The Impact of Investment Decisions on Firm Profitability of Non-Financial Sectors in Pakistan: Mediating Role of Sales Growth

The Impact of Investment Decisions on Firm Profitability of Non-Financial Sectors in Pakistan: Mediating Role of Sales Growth

Using Bayesian Networks to Estimate the Effectiveness of Innovative Projects

Application of Capital Budgeting Method to Evaluate Investment Decisions on Additions to Fixed Assets at PT Hatten Bali

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