CAPITAL BUDGETING Research Paper Example | Topics and Well Written Essays - 1000 words

CAPITAL BUDGETING - Research Paper Example Moreover, it is a decision process that focuses on long-term investment for revenue and expenditure. My paper will be based on discussion of United State budgeting as a reference but the framework is applicable to the most part to any budgeting system whether national, state, or local, or whether it is in Europe or any other continent. Budgeting is done as a way of setting objectives and goals, for allocation of the resources essential to attain the objectives, for determining progress toward objectives, identifying inadequacies, and for controlling and integrating the diverse activities carried out by many sub-units within large bureaucracies both public and private (Rubin, 2004). Debt capacity refers to the ability of the government to make required debt service payments and to be able to pay back debt incurred without ruining its reputation either to other states or individuals. Therefore,this section will deal with the speculative issues affecting state debt management and accounts on a state debt financing policies and debt limits. State debt management processes and practices are important factors in the preparation of capital budgeting in order to ensure that the government is able to equalize the level of debt and/or debt services relative to current revenue that an providing entity can support and undue budgetary constraints that can affect the ability of the government to repay the debt on time does not arise. Therefore, when coming up with a capital budget, current expenditures are financed by current revenues while capital expenditures can be financed by borrowed funds. Debt financing is refunded by the cost of using public investments by the taxpa yers on the â€Å"benefit received† principle. The government uses a portion of taxes paid by the taxpayers as a way to ensure future taxpayers bear their â€Å"fair share† as a way to pay the debt incurred to provide public facilities. Secondly, debt capacity is determined

The smartest guy in the room - the enron documentary Essay

The smartest guy in the room - the enron documentary - Essay Example Precisely, the company’s top management inflated the stock prices and amassed overwhelming capital investments from the shareholders while the company was running into bankruptcy. After the company collapsed, Enron’s shareholders were subjected to reduced per capita income, which further influenced a reduction in the country’s GDP (Gross Domestic Product). In order to prevent the occurrence of inflated stock prices that in turn influenced shareholders to invest in fraudulent companies, the government should issue strict regulations. The importance of this approach is to ensure that the business environment is informed about every company’s financial prospectus, statement of profits and losses, and its overall performances in the market (322). Eventually, every company will only present actual information to the market and the shareholders’ responses will in turn affect increase or decrease in the stocks’ prices. Considering such a regulation is vital towards financial development and contentedness of the investors (325). This will serve for the benefit of the country’s economic environment since corruption and fraudulent company practices will be diminished. Enron’s top management is depicted in the movie as a group driven by the greed to earn and resuscitate the company to a profitable position. Therefore, the company’s accounting department embarks on the use of the â€Å"mark-to-market† accounting tactic that aims at deceiving the investors’ population to acknowledge its performance through the highlighted bogus profits (Moeller 34). This accounting tactic enabled the company to forecast on its probable profits in a ten-year period and establish them on their current profit statement as though the Enron had made them. The tactic is fraudulent and should not be used in business organizations. Enron’s CEO Mr. Jeffrey Skilling and Kenneth Lay are depicted in