Capital Budgeting is the first and the foremost procedure followed to spend money on long term projects and investments when it comes to a small company like Sunflower Nutraceuticals (SNC). As the company has limited funds, the projects are evaluated by using the techniques of qualitative and quantitative analysis. Capital Budgeting involves three phases which include planning, Budgeting and implementation. (Ekeha, George Ekegey. SSRN Working Paper Series, Aug 2011)
Planning is the most important phase in functioning for any type of organization especially when it comes to SNC, as the assets have a long life. The planning is made within the limit of the available expenditure. In this phase, the company decides on the type, size and number of investments that are to be made. Planning involves the following steps.