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What is capital rationing?

Question

What is capital rationing?

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Step 1
Capital Rationing
It is
technique
budgeting
strategy which is used in capital
It is used by campanies to put Limitations
new inuestments. Capital ratoning i used when
campany from its
a
retuen on inuustment CROI) of a
inuestments is lawer and cast e
hig her
new inuestment is
help_outline

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Capital Rationing It is technique budgeting strategy which is used in capital It is used by campanies to put Limitations new inuestments. Capital ratoning i used when campany from its a retuen on inuustment CROI) of a inuestments is lawer and cast e hig her new inuestment is

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Step 2
rategy used
ymanagement to allocat funds
a
available for inustment into diferent inuustment
Oppartunihes A cambination of available inuustment options
generate highest NPV is delectad by the
management. Main object f capital rationingis to
over-investment in assets
that can
eniwre that there is no
strategy f capital Tationing is not adeguately
used, cempany might atart
and may
gething lew setwns
become iniolent. Another main
even
objechue ef capital Tahioning
is to maximize the
wealth of hareholdlers'
help_outline

Image Transcriptionclose

rategy used ymanagement to allocat funds a available for inustment into diferent inuustment Oppartunihes A cambination of available inuustment options generate highest NPV is delectad by the management. Main object f capital rationingis to over-investment in assets that can eniwre that there is no strategy f capital Tationing is not adeguately used, cempany might atart and may gething lew setwns become iniolent. Another main even objechue ef capital Tahioning is to maximize the wealth of hareholdlers'

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