In today's volatile market, what do you think is the most important step in capital budgeting...

Question

Question

In today's volatile market, what do you think is the most important step in capital budgeting financial analysis? Why?

Answer 1

Answer #1

The most important step in the process of capital budgeting is the estimation of cash flows. The reasons for the same as follows:

It gives the sense to manage how much risk in terms of estimated vs actual budget may bring up.
It ensures the investment is funded with right budget and hence, optimum utilization of resources is in place
It facilitates the process of decision making on investment proposals
It safeguards business from financial risks as estimation of cash flows will indicate the overall economic health of the business.

Answer 2

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