Question

Please type in your answer : If you were assigned to prepare a capital expenditure budget request, what two people (or types of people) would you want most on your team? Why? How would you expect to use them?

Answer 1

Capital Expenditure

Capital expenditure is the money spent by the government on the development of machinery, equipment, building, health facilities, education, etc. It also includes the expenditure incurred on acquiring fixed assets like land and investment by the government that gives profits or dividend in future.

Capital Expenditure Budget

Most companies budget their capital expenditures separately from other expenditures. Having a separate budget from operational expenses,

for example, makes it simpler for companies to calculate the respective tax issues. For operational expenses, deductions apply to the current tax year, but deductions for capital expenditures are spread out over the course of years as depreciation or amortization.

Team for Capital Expenditure Budget

• ​​​Upper Management
• Owner

Why they should be into team

Much of the need for capital expenditure comes from the assessment of department heads, who run the day-to-day operations of a certain group. They are well aware of any issues within their group that would need updating or replacement. This bottom-up approach assessment helps determine whether any capex expenditures are beneficial for long-term growth, what is economically feasible, and what the return on the investment will be. In the end, capital expenditures are inevitably determined by upper management and owners.

How would they perform in the Capital Expenditure budget ?

In deciding on capital expenditure for a certain item, a company's management makes a statement about its view of the company's current financial condition and its prospects for future growth.

Capital budgeting decisions also give an indication regarding what direction the company plans to move in the years ahead. Capital expenditure budgets are commonly constructed to cover periods of five to 10 years and can serve as major indicators regarding a company's "five-year plan" or long-term goals.

Capital expenditures are a large cost for a company but usually necessary. They come with many benefits and many risks, which is why it is imperative to create a sound and through capital expenditure budgeting plan that takes into consideration all variables. If a company can do this correctly and execute capex investments appropriately, it will lead to positive growth and success for the firm.