Our policy on investment decisions aims at maximizing the company's value.Decisions are based on four methods of appraisal on capital budgeting:-
*Accounting Rate of Return (ARR). Used to eliminate proposals that do not merit further investigation.
*Pay back period.The shorter the period, the better the project.
*Net Present Value (NPV). When NPV is positive then the project is viable. Others are rejected.
*Internal Rate of return (IRR). When IRR is higher than the required rate of return, then the project is viable (required rate of return is determined when NPV equal to zero).
-Financing Decisions are based mostly on installment credit and relatively often, on own funds.
-Controlling of Finances is based on Company Policies and Board orders.
-Degree financial control is high (Budgets, controlled cash flows as well with other related financial matters are met within EAB' S approved accounting principles.
No comments:
Post a Comment