Page 87 - IMDR MSME BOOK 2021

Managing Finance in Micro, Small & Medium Enterprises
predicting cash ows, for usefulness of cash budgeting in
managing expenditure in assessing the short term
nancial needs . Most of the respondent rms considered
the cash budgeting to be very useful for nancial
planning for their rm.

Capital Budgeting
Capital budgeting involves choosing projects that add
value to a company. The capital budgeting process can
involve almost anything including acquiring land or
purchasing xed assets like a new truck or machinery.
Capital budgeting techniques are the methods to
evaluate an investment proposal in order to help the
company decide upon the desirability of such a proposal.
In the present study it is found that 46% of the
respondent rm have been using the prescribed
techniques to take the capital expenditure decisions. It
implies that there is lack of awareness among the
entrepreneur about the nancial tools and technical
terminology but these decisions are being taken on their
experiences. It is found that for capital expenditure
decisions majority always use payback period method,
sometimes use NPV method and rarely used ARR
method. It shows that majority of the respondent rm
have been using the prescribed techniques to take the
capital expenditure decisions. Even those who use
capital budgeting techniques sometimes there is
majority of respondents who are using DCF methods.
Cash Management

Cash Management is one of the most crucial aspects for
any business. While being protable is necessary,
maintaining liquidity is utmost important for any
organization. This is done via a variety of techniques like
preparation of cash ows forecast, Preparation of actual
cash ows, Review of actual cash ows & analysing the