--%>
Assignment Help - homework help

Describe capital rationing

Describe capital rationing? Should a firm practice capital rationing? Why?
Capital rationing is the practice of setting dollar restriction on what will be invested in new capital budgeting projects. Proprietorships, partnerships and private corporations are in a location to do whatever the owners wish. However, it can be argued that for a publicly traded corporation capital rationing may not be consistent along with maximizing the value of the firm. It is because some value adding projects may be discarded if they would cause the firm to exceed its self imposed capital rationing limit.

   Related Questions in Finance Basics

  • Q : Describe free cash flows Describe "free

    Describe "free cash flows?" It represents the total cash flows from business operations which are obtainable to be distributed to the suppliers of a firm's capital each year either within the form of interest to the debt holders, or dividends to

    		•
  • Q : What is Final Budget Final Budget :

    Final Budget: Usually refers to the Governor’s Budget as amended by actions taken on the Budget Bill (example, legislative changes, and Governor’s vetoes). Note

    		•
  • Q : In which ratios long-term bond investor

    Which ratios would a potential long-term bond investor is most interested in? Describe. Current & potential lenders of long-term funds, such like banks & bondholders, are interested in debt ratios.  While a business's debt ratios ri

    		•
  • Q : Factors affecting option of maximum

    Describe the factors affecting the alternative of a maximum cash balance amount. The maximum cash balance amount is finding out by obtainable investment opportunities, the expected return on investments, and the transaction cost of making invest

    		•
  • Q : Domestic supply and demand diagram

    Normal 0 false false

    		•
  • Q : Methods to determine Promotional Budget

    What are the methods to determine Promotional Budget? Explain in brief.

    		•
  • Q : Describe Section 28.00 Section 28.00 :

    Section 28.00: It is a Control Section of Budget Act which authorizes the Director of Finance to support the augmentation or diminution of items of expenditure for the receipt of un-anticipated federal funds or other non-state funds, and which identif

    		•
  • Q : Which ratios would banker is interested

    Which ratios would banker is most interested while assuming whether to approve an application for short-term business loan? Illustrate.Bankers and other lenders employ liquidity ratios to distinguish whether to extend short-term credit to a firm

    		•
  • Q : Legal factors to restrict a corporation

    Are there any legal factors which could restrict a corporation in its attempt to pay cash dividends to common stockholders? Describe. A firm may be legally limited as to the dividends it can pay through existing bond indentures or loan agreemen

    		•
  • Q : Present value influenced by change in

    Normal 0 false false