Capital Budgeting Practice in Bd

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Executive Summary Reckitt Benckiser Bangladesh Ltd is a leading player in the FMCG market of Bangladesh with a focus on Health, Hygiene & Home. Making differencing from conventional playing company in Bangladesh Reckitt Benckiser has strong intention for modern developed capital budgeting technique in evaluating their potential projects especially in large R&D projects. The company mainly uses IRR. It uses sophisticated methods to project future cash flows. The company also uses scenario analysis to incorporate risk and for some very complex projects, it uses simulation analysis with the help of parent company in UK. However, Reckitt Benckiser Bangladesh Ltd is a well established company and it does not take large projects very…show more content…
Tax margin of various outlet of Reckitt Benckiser around the world has different corporate tax rate determined by respective country authority. As Reckitt Benckiser Bangladesh Limited is a publicly listed company it has corporate tax margin @ 32.5%. Sale revenue projections of a newly launched product project are performed by highly statistical software using comprehensive data. Depreciation tax shield enhance company’s case inflow value greatly as it has high corporate tax rate. Company is well equipped with using technically developed analysis of financial technique to determine viability of proposed projects. Change in Net Working Capital (CNWC) In capital investment decision of Reckitt Benckiser Bangladesh Limited, Net working capital is a critical issue as it resembles loan. Required cash in hand, accounts receivable, bills receivable, inventories are normally fall as current asset of company’s project while accounts payable, bills payable are categorizes as basic current liability of proposed project. After determining the balance of current assets and liabilities, difference is charged as change in net working capital. Opportunity Cost Capital budgeting decision of company requires proper enumeration of opportunity cost of proposed project. As it is an existing company, various opportunity cost

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