Can you give me some recommendations for some changes in an organizations investment strategy in order to improve its investment performance?
The investment decisions of a firm are generally known as the capital budgeting, or capital expenditure decisions. The firm's investment decisions would generally include expansion, acquisition, modernization and replacement of the long-term assets. Sale of a division or business (divestment) is also as an investment decision.
Decisions like the change in the methods of sales distribution, or an advertisement campaign or research and development programs have long-term implications for the firm's expenditures and benefits, and therefore, they should also be evaluated as investment decisions. Several different procedures are available to analyze potential business investments. Some concepts are better than others when it comes to reliability but all provide enough information to get the general scope of the investment.
Organization should use right technique to appraise their investment decisions. Few criteria of selection of Capital Budgeting project can be :
It should maximize the shareholders' wealth.
It should consider all cash flows to determine the true profitability of the project.
It should provide for an objective and unambiguous way of separating good projects from bad projects.
It should help ranking of projects ...
The solution discusses changes that can made to an organizations investment strategy to make significant improvements.