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If a company is having many investment opportunities and all of them have positive Net-Present-Value. State what can be the motive for capital being rationed ?

State what can be the motive for capital being rationed ?

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Question ajoutée par Utilisateur supprimé
Date de publication: 2014/08/10
Kamran Anjum
par Kamran Anjum , Head of Internal Audit , Rafhan Maize Products Company limited, Faisalabad, Pakistan, Ingredion Incorporated Gmbh

If a company does not have enough funds to take the benefit of investing in all positive NPV projects it faces the situation of capital ratoining. In this situation projects will be ranked according to their profitiability index (in case of divisible projects) or a trial and error method used where project are not divisible. Once ranking is done budget is allocated accroding to the ranking assigned and availability of budget. 

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