Saudi Electronic University External Capital Rationing Discussion

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Business Finance

Saudi electronic university

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( Evises A finance director of a multi-crore engineering cor once stated, "We do not face any capital rationing problem. The capital market is big enough to supply us funds in various ways to finance any profitable project. We do, however, impose a budget ceiling on the capital expenditures of divisions for control purposes. But that does not imply a shortage of funds and therefore, non- acceptance of genuinely profitable projects." What (is the finance director talking about? (1.5 marks (words 300) You are required to reply to at least two peer answers. These post replies must need to be substantial and (constructive. (0.5 mark
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According to the finance director, the company is not subject to any form of External
Capital Rationing. Before emphasizing the director’s statement is imperative to know what is
capital rationing. Capital rationing is a method that involves selecting the most lucrative
projects in which to invest the available resources. During the course of a company's capital
budgeting process, it may be necessary to use ...

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