This measure, 'return on capital invested' can be applied to all forms of business enterprise, so it allows you to compare agricultural businesses with other businesses. Equity budgeting Equity budgeting means projecting forward your assets, net of liabilities. Most of us like to know how much better off a particular plan of action will leave us at some time in the future. Equity may be expressed as a percentage of total assets. This could amount to an increase in absolute terms, but it would be a decrease in percentage terms if debt were set to rise faster than assets.
Development budgeting A development budget shows the annual cash flows for a project.
It is a financial plan in which you predict annual receipts and payments, and the cumulative surplus or deficit. The development budget identifies peak debt, finance needs and the number of years to reach break-even. It is a basis for predicting profitability and viability of a project through discounted cash flow analysis. Capital budgeting Capital budgeting is a general term used to describe investment analysis, rather than a technique as such. Investment analysis, like equity budgeting, takes account of changes in assets as well as cash balances.