In earlier articles, we have discussed the types of capital budgeting. Today we will discuss capital budgeting process:
1) Identify investment proposals: the first step in capital budgeting process lies with identification of the investment proposal of the firm.
2) Screening the proposals: the next step is to screen the proposals which mean to find out various proposals.
3) Evaluate the proposals: than it is necessary to check the feasibility of the various proposals.
4) Fix priority: now it is up to the firm to decide where to make investment and fix the priority accordingly.
5) Final approval: after deciding all the above things now the firm gives final approval regarding where to make the investment.
6) Implementation of the proposal: after getting the final approval, the proposal is implemented and the firm makes required investment.
7) Review performance: last but not the least the firm now review the performance of the proposal that the investment made by them is generating some profit or not.
These are the seven types of capital budgeting processes.