Question

Explain the investment decision under the financial plan? In which areas should the investment should be on the basis of priority?

Answer 1

Enterprise’s funds are invested in different assets so that the enterprise is able to earn the highest possible returns on investment.
An estimate of fixed assets and of working capital should be clearly mentioned. Investment is required for:
(i) Land and Building
(ii) Machinery and Plant
(iii) Installation Cost
(iv) Preliminary Expenses
(v) Margin for working capital
(vi) Expenses on research and development
(vii) Investment in short-term assets viz. raw material, level of cash, etc.