A Review of Capital Budgeting Techniques

Perhaps the single most important decision faced by management is the selection of investment projects that maximize the present value of shareholders’ wealth. This paper is a review of the literature on capital budgeting procedures. Analytic techniques such as Net present value (NPV), Internal rate of return (IRR), Payback, Discounted Payback, Time-adjusted discounting, Accounting Rate of Return, Profitability Index and Modified IRR are reviewed here. Additional supplementary techniques, when some complexities relating to risk and uncertainty are involved, are also discussed. Results of field surveys are reported. In sum, the results suggest increased prominence of the NPV as an evaluation technique consistent with its much emphasized academic merit. In particular, the Graham and Harvey (2001) survey reveals that the likelihood of using specific evaluation techniques is linked to three factors namely firm size, firm leverage and CEO characteristics. The study recommends the use of real options techniques as they facilitate the linkage of financial objectives with corporate strategy in the ever-increasingly complex business environment.

Ownership Structure and Firm Performance

This study implies that diffuse ownership structure negatively affects firm performance. Our study based on empirical evidence found that the ownership structure (the outsider and the insider i.e. managerial ownership) favorably increase the firm performance. Our sample data was based on 200 Malaysian companies listed on the Malaysian stock exchange Bursa Malaysia. We used Tobin’s Q and accounting rate of return for firm performance measurement and compared it with important ownership structure and managerial ownership structure. Our results indicate that both ownership structures have a positive relationship with firm performance.

ANALISIS FINANSIAL UNTUK KELAYAKAN USAHA UD. PRIMA BAKERY

Penelitian ini bertujuan untuk melakukan studi kelayakan usaha yang ditinjau dari aspek finansial pada UD. Prima Bakery. Dengan mengunakan metode penelitian kualitatif deskriptif dalam melakukan analisis kelayakan finansial. Hasil perhitungan analisis finansial diperoleh hasil adalah Accounting Rate of Return 72%, Payback Period 2.35 tahun, Net Present Value Rp. 64.443.000,Profitability Index 1.44, Net B/C Ratio 1.2, dan Break Even Point 477 %. Dari hasil perhitungan diatas berdasarkan pertimbangan kriteria finansial menunjukkan bahwa kegiatan UD. Prima Bakery layak dijalankan.

Transmission Pricing Using Accounting Rate of Return and MW-km Methods

This paper presents a realistic and transparent approach to determine transmission cost for the transmission lines of a power system network by allocating the costs to all the participating generating units and load demands. There is a requirement for developing an appropriate transmission pricing mechanism which can give economic and technical information to the participants of the market, i.e., customers, generation and transmission companies. This paper proposes a methodology to allocate the cost of transmission in power system network. In this paper, accounting rate of return (ARR) and MW-km approaches have been used to evaluate the cost of transmission in the system. Simulation results are presented on standard IEEE 14 bus system.

The Extent of Using and Trusting Capital Budgeting Methods in Projects Appraisal in Palestinian Corporations

This research paper aims to find the degree of the use as well as the trust of the Net Present Value (NPV), Payback Period (PBP), Internal Rate of Returns (IRR) and Accounting Rate of Returns (ARR) as a key capital budgeting method. The research conducted on the listed corporations in Palestine which are 48 company. A questionnaire distributed on 77 financial and project/operations managers in these corporations with 67 responds. The result shows that both discounted and non-discounted cash flows methods are used and trusted by Palestine public corporations. However, on the other hand, the above four methods are volatile in term of use and trust. The most used and trusted capital budgeting method is the Payback period (PBP). This followed by the Net Present Value (NPV). Accounting Rate of Retunes (ARR) becomes third. Thus the least used and trusted method is the Internal Rate of Returns (IRR).

Pengaruh Investasi Asset Jangka Pendek Dan Aktiva Terhadap Laba Usaha Pada Pt. Taspen (Persero)

This study was to determine the effect of Short-Term Investments and Assets Assets in generating profits in the company PT. Taspen. The method of analysis used qualitative methods That is explained and analyzed by descriptive data. Quantitative methods to study whether the Short-term investment is profitable or not, can be determined either by the method Accounting Rate Of Return (ARR) That method that measures the level of profit from investments used to gain tersebut.dan the return on investment assets at PT. Taspen. To test the hypothesis then performed calculations using multiple linear regression analysis. Furthermore pengelohan data and hypothesis testing will be assisted by a computer program Softwere SPSS (Statistical Service and Solution product).Research shows that variable Short Term Asset Investments concluded that simultaneous effect relationship is negative and insignificant. But in partial, it provides a significant and positive effect on earnings. Assets Investments variable and not significant positive effect on earnings, but in partial, it provides a significant and positive effect on earnings.

Do Firms' Characteristics Make a Difference of the Choice of Capital Budgeting Practices? Evidence from Sri Lanka

The aim of this study was to examine the differences of the choice of capital budgeting practices in terms of firms’ characteristics of Sri Lankan companies. The primary data were garnered from 186 financial officers using self-administered questionnaires. Collected data were then analysed using independent sample t- test. The Results of the study revealed that the use of simple capital budgeting practices were mostly preferred by small sized firms and mainly managed by finance professionals with non-MBA educational qualifications and short tenure. Sophisticated and advanced capital budgeting practices were used mostly by large firms; and were mainly managed by finance professionals with master of business administration qualification and long tenure. According to the industry differences, accounting rate of return was primarily applied by non-MBA qualified financial officers and was also preferred by non-manufacturing firms. None of the other methods made any significant differences in terms of type of industry. Sophisticated capital budgeting practices were determined by the size of the capital budget, advanced capital budgeting practices were determined by both the size of the capital budget and the educational qualifications of the finance professionals. In a similar vein, simple capital budgeting practices were determined by the size of the capital budget, the educational qualifications of the financial officers, and type of industry. Overall, this study has made parametric contributions to the choice of capital budgeting practices in terms of firms’ characteristics of Sri Lankan companies. The findings of the study are useful to the investment decision makers when they are appraising investment projects.

The Extent of Using Capital Budgeting Techniques in Evaluating Manager’s Investments Projects Decisions (A Case Study on Jordanian Industrial Companies)

The aim of this research paper is to study the extent of using capital budgeting techniques on choosing the suitable project for investment. The current research study focused on capital budgeting techniques such as Net Present Value NPV, and Internal Rate of Return IRR, and Pay Back period PB, which is considered the main tools in the hands of decision makers in deciding the best possible alternative of investment. In order to achieve the purposes of the study a questionnaire have been created (based on Graham and Harvey survey in 2001), the aim was to cover most of the Jordanian industrial companies despite of their size and ownership in the current year 2017. Resolution data were analyzed using the statistical program SSPS. Finally, the study concluded that, 58% of Jordanian industrial companies use the Net Present Value, 22% use the Payback Period, 12% use the Internal Rate of Return, and the remaining used a combination of the Accounting Rate of Return, Profitability Index, and sensitivity analysis. The current research study is expected to assess management in choosing the best capital budgeting technique in the evaluation of its future investment projects.

Electronic magazine with rating system of an estimation of individual and collective work of students

«The electronic magazine with rating system of an estimation of individual and collective work of students» (EM) is developed in document Microsoft Excel with use of macros. EM allows to automate all the calculated operations connected with estimation of amount scored by students in each form of the current control. EM provides automatic calculation of rating of the student with reflection of a maximum quantity of the points received in given educational group. The rating equal to “1” is assigned to the student who has got a maximum quantity of points for the certain date. For the other students the share of their points in this maximum size is indicated. The choice of an estimation is made in an alphabetic format according to requirements of the European translation system of test units for the international recognition of results of educational outcomes (ECTS - European Credit Transfer System), by use of a corresponding scale of an estimation. The list of students is placed on the first page of magazine and automatically displayed on all subsequent pages. For each page of magazine the optimal size of document printing is set with automatic enter of current date and time. Owing to accounting rate of complexity of task EM is the universal technical tool which can be used for any subject matter.