Question

What are capital expenditures? Why are they important for cities functioning? How are they financed?

Answer 1

Capital expenditure refers to funds that a company uses to buy, improve or retain long-term investments in order to improve the company 's productivity or ability. Capital spending, like a copy machine, can be real, or it can be intangible, such as a copyright. Both tangible and intangible capital investments are counted as properties under certain tax codes because they have the ability to be sold if needed.

The decision on capital spending is the method of making decisions on fixed asset assets that are not planned for sale, such as land, renovation, plant & machinery, etc. This applies, thus, to the long-term preparation of planned capital expenditures which involves the raising and use of long-term funds. The main role of the finance manager is to choose the most profitable investment project. This role is extremely critical because any action made in this direction by the management influences the company's performance and sustainability for many years to come.

Budgets for capital spending require sufficient planning before beginning. They might otherwise get out of hand. You need to find the scale of the project, work out reasonable timelines, and ensure that the entire strategy is accepted before beginning a project. At this point, you should worry about how much internal resources, including personnel, materials, budgets, and facilities, the project would need. You should have more details coming into the project in order to have a more detailed budget.