A Survey of Capital Budgeting Practices in Business Firms and Military Activities.
Technical rept. 1971-72,
NAVAL POSTGRADUATE SCHOOL MONTEREY CALIF
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The report presents the results of a survey, taken during 1971, of the actual practices used by financial managers in business and military organizations in connection with major capital investment decisions. Responses were received from 177 business firms in a variety of industries and from 70 military installations. The primary practices reported are the uses of various financial criteria for assesssing the profitability of a proposed capital investment. Attention is given to use of these criteria in special situations and to some of the problems that may be associated with using them. The condition of capital rationing is explored to determine the extent of its occurrence, the causes of it, and the practices adopted by management to deal with it. Finally, the respondents offer their views as to the most critical and the most difficult phases of the total capital budgeting process. The report includes critical comments by the author to set the practices reported in an appropriate theoretical context. Author
- Administration and Management