New Heritage Company Essay

3998 Words Nov 12th, 2012 16 Pages
NEW HERITAGE DOLL COMPANY
Capital Budgeting

NEW HERITAGE DOLL COMPANY
Capital Budgeting

Brief Case

Brief Case

Brief Case

Brief Case

Brief Case

Brief Case

Brief Case

Brief Case

To: CFO (New Heritage Doll Company)
From:
Date: 11/16/12
RE: NEW HERITAGE DOLL COMPANY

To: CFO (New Heritage Doll Company)
From:
Date: 11/16/12
RE: NEW HERITAGE DOLL COMPANY

Here a composite report is advanced on the toy industry, New Heritage Doll Company and the evaluation of its investment projects.
Here a composite report is advanced on the toy industry, New Heritage Doll Company and the evaluation of its investment projects.

Index
Index

| | 1. Introduction | 4 | | | | | | | 2. The
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Capital Budgeting

------------------------------------------------- 4.1 Capital budgeting
Capital budgeting is the planning process used to determine whether an organization's long term investments such as new machinery, replacement machinery, new plants, new products, and research development projects are worth pursuing. It is budget for major capital, or investment, expenditures.

------------------------------------------------- 4.2 Ranked Projects
The real value of capital budgeting is to rank projects. Most organizations have many projects that could potentially be financially rewarding. Once it has been determined that a particular project has exceeded its hurdle, then it should be ranked against peer projects. The highest ranking projects should be implemented until the budgeted capital has been expended.

------------------------------------------------- 4.3 Need for capital budgeting 1. As large sum of money is involved which influences the profitability of the firm making capital budgeting an important task. 2. Long term investment once made cannot be reversed without significance loss of invested capital. The investment becomes sunk and mistakes, rather than being readily rectified, must often be born until the firm can be withdrawn through depreciation charges or liquidation. It influences the whole conduct of the business for the years to come. 3. Investment decision are the base on which the profit will

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