What is capital rationing, Financial Management

Assignment Help:

What is capital rationing? Should a firm practice capital rationing? Why?

Capital rationing is the practice of putting dollar limits on what will be invested in new capital budgeting projects.  Private corporations, partnerships and Proprietorships are in a position to do whatever the owners wish.  It can be disputed, but, that for a publicly traded corporation capital rationing may not be steady with maximizing the value of the firm.  This is because various value adding projects may be rejected if they would cause the firm to go beyond its self imposed capital rationing limit. 

 


Related Discussions:- What is capital rationing

Objective of wealth maximization, Q. The main rationale for the objective o...

Q. The main rationale for the objective of wealth maximization is that it shows the most efficient use of the society's economic resources and therefore leads to a maximization of

What is rectification of errors, Principles of Financial Accounting and Man...

Principles of Financial Accounting and Management 1. Define Accounting. Briefly explain the ‘Entity Concept' and ‘Money Measurement Concept' of accounting. 2. What is rectif

Describe the meaning of financial management, Q. Describe the Meaning of Fi...

Q. Describe the Meaning of Financial Management? Meaning of Financial Management: - Financial management is a vital as well as an integral part of business management. It demot

Company default rate on account receivable when its too low, Can a company ...

Can a company have a default rate on its accounts receivable that is too low?  Explain. A company might have a default rate on AR that would be considered too low if by liberal

Risk of portfolio if asset of low correlation are combined, What happens to...

What happens to the riskiness of a portfolio if assets with very low correlations (even negative correlations) are combined? How successfully diversification decreases risk reli

Futures contract, Futures Contract It is an obligation to purchase or s...

Futures Contract It is an obligation to purchase or sell an asset at an agreed-upon price on an exact future date. The buyer commits himself or herself to buy the asset, and th

Defne iu.s. companies that benefit from a stronger dollar, What kinds of U....

What kinds of U.S. companies would benefit most from a stronger dollar in the foreign exchange market?  Explain. U.S. companies which import goods from other countries would bene

Determine the optimal production quantity, Water Wheelies manufactures high...

Water Wheelies manufactures high-pressure sprinkler heads. These are produced periodically at a rate of 20,000 per month. Demand is steady at 15,000 per month. Each production run

Absolute performance standard, Absolute Performance Standard is a method of...

Absolute Performance Standard is a method of measuring an organization's development and how effective and efficient it is at operating its business. The absolute performance stand

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd