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Capital v Revenue Expenditure
Capital Revenue
Cash spent on Cash spent on day-to-
investment in the day operations: e.g.
business: e.g.
Raw materials
Plant & machinery Energy costs
Factory buildings Wages and salaries
IT systems Marketing costs
Distribution equipment Office administration
Fixtures and fittings…read more

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Capital expenditure = long-term
The main distinction is that capital
expenditure is on non-current
assets which have an "economic
life" in the business ­ they are
intended to be kept, rather than
sold or turned into products…read more

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Many reasons for capital expenditure
· To add extra production capacity
· To replace worn-out, broken or
obsolete machinery and equipment
· To support the introduction of new
products and production processes
· To implement improved IT systems
· To comply with changing legislation &
regulations…read more

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The implication of scarce finance
The Problem Choices have to be
Finance in Which investments
nearly every justify the risks?
business is How to choose
between competing
scarce investments?…read more

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What is investment appraisal?
The process of
analysing whether
investment projects
are worthwhile…read more

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