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HA520 Unit 8 Discussion 2&3
In two different paragraph with no less than 100 words give your personal opinion to Carrie Banks and Jesus Pacheco
Investing can be risky, the wrong decisions or miss calculations can cost any organization money. A thorough and careful analysis must be made before any investment should be made. One of the first things to consider is the objective or goal that is trying to be attained, this decision should still be in line with the goals of the organization. Next, identify the pros and cons of the investment, what are the risks and what are the profits that could be made. One of the key decisions is ensuring that any investments that are considered are within the budget limits of the organization.
Before committing to the investment there is some key information that needs to be analyzed. Identifying trends which can help increase support from investors, help with marketing strategies, or help identify risks. An estimate of the project’s cash flow that is expected should be analyzed, this covers the capital outlays, operating cash flow and the ending cash flow. Another thing to consider is the life span of the project. A forecast of the project’s costs and revenues should be made to assist with budgeting (Gapenski, 2016).
Gapenski, L. C., & Reiter, K. L. (2016). Healthcare finance: an introduction to accounting & financial management. Chicago, IL: Health Administration Press.
“Capital investment is a sum of money provided to a company to further its business objectives. The term also can refer to a company’s acquisition of long-term assets such as real estate, manufacturing plants, and machinery” (Investopedia). When it comes to making an investment, there are many types of decisions that need to be made. One important aspect is to make sure that enough time is spent on weighing the pros and cons of the investment. Making a bad investment can lead to loss in money for the company and depending on how big the investment is, can lead to the collapse of the company. More decisions that need to be made before an investment are as follows: (Capital Investment Decisions).
- Identification of a project
- Definition of a project and screening
- Analysing and accepting
- Post audit
The kinds of information needed before deciding on a capital investment project are as follows: (1) Suppose a major piece of equipment such as an x-ray machine breaks down. It would be a good capital investment to Replace the machine then to loose the money that is made from the x-ray machine. (2) The same can be said if the same x-ray machine need updates or some form of TLC. It would be a good capital investment to make the updates needed on the device. (3) Finally, suppose the same company wants to add a second x-ray machine to expand their business. The company will have to weigh the pros and cons as to whether that will be a good investment.
Investopedia; Capital Investment Definition; Will Kenton; Updated Apr 25, 2019; What is a Capital Investment?; Retrieved From https://www.investopedia.com/terms/c/capital-investment.asp
Capital Investment Decisions; 2019; Capital-Investment.co.uk; Retrieved From https://www.capital-investment.co.uk/capital-investment-decisions/
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