Capital Expenditure Reviews - by Ravi Patel

 

Entrepreneurs are very careful in investing money and have an instinct for capital investments. However, what process is used to justify capital expenditures?

 

It helps to have a gut feeling about investing money for new businesses, products, processes, real estate, machinery and so on. However, it might be prudent to have a standard, formalized capital expenditures review process.

 

A process that includes projected capital outlays, cash inflows from the investment, tax impact, and a Net Present Value analysis should be helpful to validate the gut feel. Monitoring the project and a post-audit should help to refine future capital expenditure justifications.

 

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