Investment decision refers to selecting and acquiring the long-term and short-term assets in which funds will be invested by the business.
(i) Cash flow of the project: Capital budgeting considers factors associated with nature of the industry, taxation, policy and regulatory structures, political and social stability, etc., to make decisions related to expected-cash flows for huge investments.
(ii) Returns from investment: The selection of projects requiring investments are identified based on possible benefits or returns a business will obtain by preparing appraisal reports. These reports determine the amount of investments required and the availability of possible returns against the required amount.
(iii) Trade-off between profitability and liquidity: If a business should have continuous liquidity or enough working capital for continuing operations that generate sales and cater to current obligations. Lack of working capital for current assets would make the business illiquid and lead to losses.
See AlsoThe Agile Startup: Quick and Dirty Lessons Every Entrepreneur Should KnowEntrepreneurship is the process of creating and running a new business venture in order to generate profits. It is a crucial factor in driving economic growth and development in both developed and developing countries. Entrepreneurial activity helps creatUnderstanding the Role of Decision-Making in Entrepreneurship Investment Decisions
Investment decision refers to selecting and acquiring the long-term and short-term assets in which funds will be invested by the business.
(i) Cash flow of the project: Capital budgeting considers factors associated with nature of the industry, taxation, policy and regulatory structures, political and social stability, etc., to make decisions related to expected-cash flows for huge investments.
(ii) Returns from investment: The selection of projects requiring investments are identified based on possible benefits or returns a business will obtain by preparing appraisal reports. These reports determine the amount of investments required and the availability of possible returns against the required amount.
(iii) Trade-off between profitability and liquidity: If a business should have continuous liquidity or enough working capital for continuing operations that generate sales and cater to current obligations. Lack of working capital for current assets would make the business illiquid and lead to losses.
