Organizations everywhere must decide how to most efficiently spend their capital to continue operations, innovate, and grow. Capital budgeting is a systematic process used to determine how capital – a limited resource – is best allocated to projects that maximize the value of the organization. The projects chosen must align with the organization's greater strategy.
This course demonstrates the value of following the capital budgeting process and introduces the three stages in that process: project identification and screening, quantitative assessment, and capital allocation and rationing. The course then focuses on the first stage, exploring how to identify opportunities for capital investment, and subject these initial ideas to preliminary screening based on their feasibility, alignment with organizational strategy, and dependence on other projects.Learning Objectives
- Describe capital budgeting
- Associate capital budgeting activities with the stages of the process in which they're performed
- Describe the relationship between organizational strategy and capital investment opportunities
- Recognize appropriate sources and suggestions for capital budgeting opportunities
- Perform key steps to screen project ideas