As one particular budget is completed by the financial staff, it will be thoroughly reviewed by the chief financial officer. When the CFO approves the correctness of the data used in the construction of the budget, she forwards it to the chief executive officer. Upon his own analysis as well as based on the input retrieved from the financial staffs, the CEO will approve the budget.
c) in terms of implementation, this is completed throughout the entire organization. At the small scale of the organizational departments, the implementation is ordered and supervised by the department managers. At the level of the entire organization, the implementation of the budget is ensured by the CFO and by the CEO. These two are also in charge of the ongoing process of control and monitoring.
Once the technical dimensions of the budget are addressed, it is important to take an overall look at the capital budgeting process. From this angle, the following elements are noteworthy:
The organizational budget is generally fixed, but the company strives to become more adjustable and flexible in order to better meet emergent requirements; it however focuses on consistency and the budget is mainly fixed
New or discontinued services and procedures are assessed upon the specific and entitled...
Capital Budgeting Over the last several years, different levels of government have been facing a variety of challenges when it comes to budgetary issues. For the city of Ft. Lauderdale, the Department of Public Safety is encompassing 60% of their total expenditures every year. This is because it includes areas such as police and fire / rescue services. At the same time, many of these departments are subdividing into other areas
Capital Budgeting for Guillermo Furniture Guillermo Navallez, owner of the relatively small yet highly successful furniture manufacturer Guillermo Furniture, is faced with a tough decision. Due to changes in the industry an in his operating atmosphere, Guillermo is unable to continue competitively running his company as he has for the past decades, with a crew of skilled laborers building furniture and with distribution handled essentially by the company itself. He must
Capital Budgeting and Government Regulations Airline Industry LONG-TERM CAPITAL BUDGETING IN AIRLINE INDUSTRY Government regulation: Why or why not Major reasons for government involvement in a market economy Interests of stockholders and managers: The convergence Airline: Merger or new capital investment LONG-TERM CAPITAL BUDGETING IN AIRLINE INDUSTRY For profit organizations have shareholder's profit maximization as the main aim to pursue. Traditional managerial economics expects that all projects/investments having positive net present value (NPV) shall be initiated by
Litzenberger and Joy (1975) note that in a decentralized system, quantitative measures are more common for evaluating projects, but they also note that for larger projects there is some degree of centralization. This is the case with Stryker, where the most substantial projects are approved by the Board of Directors. Ang (1986) notes, however, that there can be agency problems where the interests of the division are misaligned with the
Generally speaking, the higher a project's internal rate of return, the more desirable it is to undertake the project. As such, IRR can be used to rank several prospective projects a firm is considering. Assuming all other factors are equal among the various projects, the project with the highest IRR would probably be considered the best and undertaken first." The equation to calculating the internal rate of return is a
When a range of options are presented to management, the capital budgeting process must be used to determine the costs and cash flows associated with each option. However, the capital budgeting process is only as valuable as the inputs and assumptions. If the assumptions are not grounded in reasonable analysis and quality research, the process will not yield a valuable result. If the numbers that are input into the
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