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Literature Review Annotated Bibliography –
Capital Budgeting
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Annotated Bibliography
Alles, L., Jayathilaka, R., Kumari, N., Malalathunga, T., Obeyesekera, H., & Sharmila,
S. (2021). An investigation of the usage of capital budgeting techniques by small and
medium enterprises. Quality & Quantity, 55, 993-1006. DOI 10.1007/s11135-020-
01036-z
The article focuses on the application of capital budgeting practices in the context of
small and medium enterprises. The payback period method has been identified as a highly
popular capital budgeting technique. This method helps compute the time that is taken for a
specific investment to produce ample cash so that the initial cost can be recovered. In the case
of foreign SMEs and SMEs with experience between 11 to 15 years, the most popular capital
budgeting technique is the Net Present Value (NPV) method. The source can be used in the
research paper to understand how capital budgeting techniques can aid in the strategic
allocation of resources in the real world.
Al Wahaibi, M. A. K., Hussainy, S. S., Rajan, R., & Younas, A. (2024). SMEs Capital
Budgeting Practices: A Review Article. Journal of Ecohumanism, 3(7), 2426-2430.
DOI: https://doi.org/10.62754/joe.v3i7.4390
The comprehensive review sheds light on the adoption of capital budgeting practices in
small and medium-sized entities. These practices are quite different in comparison to the capital
budgeting practices that are adopted by larger firms. In SMEs there is a lack of a well-defined
structure since their decisions are influenced by subjective variables. It is imperative to adopt
a planned and systematic approach towards capital budgeting so that optimal project outcomes
can be achieved. The source will potentially be used in the research paper to gain knowledge
on how a methodical capital budgeting approach can add value for business organizations.
Homauni, A., Markazi-Moghaddam, N., Mosadeghkhah, A., Noori, M., Abbasiyan, K., &
Jame, S. Z. B. (2023). Budgeting in healthcare systems and organizations: a
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systematic review. Iranian journal of public health, 52(9), 1889.
doi: 10.18502/ijph.v52i9.13571
The source focuses on the budgeting practice that is adopted in health care entities. The
role of budgeting is instrumental to ensure that the available resources are allocated in an
optimal manner so that the best outcomes can be generated. By adopting a strategic approach
toward capital budgeting, it is possible for health care organizations to meet their capital needs
in an effective manner. It can help deliver improved quality of care to patients. The identified
source will be used in the research to gain an insight into diverse capital budgeting techniques
and their impact on resource allocation in health care settings.
Jarunde, N. (2022). The Role of Financial Modeling in Capital Budgeting Decisions: Risks
and Opportunities. Journal of Technological Innovations, 3(4). , doi:
10.93153/prpzjy63.
The source captures the role of financial modeling while making decisions relating to
capital budgeting. Financial models can play a catalytic role to guide the management to make
important strategic decisions pertaining to how the available resources are put to use in order
to achieve specific goals and objectives. Several risks have been identified that may arise due
to financial modeling such as black box thinking, garbage in garbage out principle, and model
bias. The source can add value to the research paper by highlighting how the adoption of
financial modeling can help in adopting robust capital budgeting practices in organizations.
Shawe, R. (2023). Budget and Organization Management. Open Journal of Business and
Management, 11(3), 910-919. DOI: 10.4236/ojbm.2023.113049
The author has argued that capital budgets play an integral role in organizations since
they help in managing scarce financial resources. Typically, organizations employ operational
as well as capital budgeting techniques for computing their resources. These techniques are of
high strategic importance since they influence the ability of business entities to carry out their
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operations in a proper way. By prioritizing robust capital budgeting, it is possible to assess the
effectiveness of leadership and management within organizations. The source will potentially
be used in the research paper to understand how capital budgeting can act as an important tool
for strategically allocating resources within organizations.
Mota, J., & Moreira, A. C. (2023). Capital Budgeting Practices: A Survey of Two
Industries. Journal of Risk and Financial Management, 16(3), 191.
https://doi.org/10.3390/jrfm16030191
In the source, the authors have presented an in-depth comparison between the capital
budgeting practices that are adopted in businesses operating in the metal-working industry and
the footwear industry. The capital budgeting decisions are made with the intention to maximize
the overall wealth of organizations. In the case of SMEs, specific concerns arise such as over-
investing or under-investing which ultimately may lead to agency costs. While developing the
research paper, the identified source will potentially be used to identify the chief variables that
come into play and influence the capital budgeting decisions and techniques that are adopted
by business organizations.
Nunden, N., Abbana, S., Marimuthu, F., & Sentoo, N. (2022). An assessment of
management skills on capital budgeting planning and practices: evidence from the
small and medium enterprise sector. Cogent Business & Management, 9(1),
2136481. https://doi.org/10.1080/23311975.2022.2136481
In the article, the researchers have focused on the management skills that are required
to effectively plan capital budgeting practices in organizations. Leaders need to possess
appropriate financial skills so that they can make well-informed decisions relating to how the
available capital should be put to use in order to achieve the goals and objectives of a business.
Another important skill is related to leadership since the members of the top position must be
able to control and lead their staff to optimally use the available resources. The source can help
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identify how the diverse management skills of individuals can strengthen the capital budgeting
practices of organizations.
Purnamasari, P., & Adriza. (2024). Capital budgeting techniques and financial
performance: a comparison between SMEs and large listed firms. Cogent
Economics & Finance, 12(1), 2404707. DOI:10.1080/23322039.2024.2404707
The source focuses on the interlink that exists between capital budgeting techniques
that are adopted by organizations and their financial performance. It has been argued that
sophisticated capital budgeting techniques such as the net present value (NPV) method, internal
rate of return (IRR) method, and profitability index (PI) method can be adopted by small and
medium enterprises and large listed firms in order to achieve optimum financial outcomes from
their investments. The source can be applied in the research context to explore how the
identified sophisticated capital budgeting techniques can aid in the strategic allocation of
financial resources by organizations.
Siziba, S., & Hall, J. H. (2021). The evolution of the application of capital budgeting
techniques in enterprises. Global finance journal, 47, 100504.
https://doi.org/10.1016/j.gfj.2019.100504
In the article, the authors have identified how capital budgeting practices have
undergone major evolution over the past years. Several techniques have been identified such
as the net present value method, the internal rate of return method, the accounting rate of return
method, the payback period method, the return on investment method, and the real option
valuation method. By adopting such techniques, it is possible for organizations to evaluate
diverse capital investments. These techniques can help make important finance-related
decisions so that the available capital can be used optimally. The source can be used in the
research paper to explore the strategic relevance of capital budgeting.
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Sospeter, N. G., & Awuzie, B. O. (2024). Capital Budgeting Implementation by Public
Sector Construction Firms in Tanzania's Housebuilding Industry: An Exploratory
Study. Journal of Construction in Developing Countries, 29(1), 87-109.
https://doi.org/10.21315/jcdc-10-22-0186
In the article, the researchers have investigated the implementation of capital budgeting
techniques in the context of public sector construction firms. Some of the most common
techniques that have been identified in the research include net present value (NPV), internal
rate of return (IRR), and payback period (PBP) techniques. These techniques can instrumental
role and help organizations make effective and well-informed decisions relating to diverse
areas such as infrastructure procurement. It is essential for the management to have proper
knowledge about the implementation of capital budgeting techniques in the real word setting
so that it can facilitate the proper allocation of resources. The source can be used to understand
the strategic relevance of capital budgeting techniques for firms.
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References
Al Wahaibi, M. A. K., Hussainy, S. S., Rajan, R., & Younas, A. (2024). SMEs Capital
Budgeting Practices: A Review Article. Journal of Ecohumanism, 3(7), 2426-2430. DOI:
https://doi.org/10.62754/joe.v3i7.4390
Alles, L., Jayathilaka, R., Kumari, N., Malalathunga, T., Obeyesekera, H., & Sharmila, S.
(2021). An investigation of the usage of capital budgeting techniques by small and
medium enterprises. Quality & Quantity, 55, 993-1006. DOI 10.1007/s11135-020-
01036-z
Homauni, A., Markazi-Moghaddam, N., Mosadeghkhah, A., Noori, M., Abbasiyan, K., &
Jame, S. Z. B. (2023). Budgeting in healthcare systems and organizations: a systematic
review. Iranian journal of public health, 52(9), 1889. doi: 10.18502/ijph.v52i9.13571
Jarunde, N. (2022). The Role of Financial Modeling in Capital Budgeting Decisions: Risks and
Opportunities. Journal of Technological Innovations, 3(4). , doi: 10.93153/prpzjy63.
Mota, J., & Moreira, A. C. (2023). Capital Budgeting Practices: A Survey of Two
Industries. Journal of Risk and Financial Management, 16(3), 191.
https://doi.org/10.3390/jrfm16030191
Nunden, N., Abbana, S., Marimuthu, F., & Sentoo, N. (2022). An assessment of management
skills on capital budgeting planning and practices: evidence from the small and medium
enterprise sector. Cogent Business & Management, 9(1), 2136481.
https://doi.org/10.1080/23311975.2022.2136481
Purnamasari, P., & Adriza. (2024). Capital budgeting techniques and financial performance: a
comparison between SMEs and large listed firms. Cogent Economics & Finance, 12(1),
2404707. DOI:10.1080/23322039.2024.2404707
Shawe, R. (2023). Budget and Organization Management. Open Journal of Business and
Management, 11(3), 910-919. DOI: 10.4236/ojbm.2023.113049
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Siziba, S., & Hall, J. H. (2021). The evolution of the application of capital budgeting techniques
in enterprises. Global finance journal, 47, 100504.
https://doi.org/10.1016/j.gfj.2019.100504
Sospeter, N. G., & Awuzie, B. O. (2024). Capital Budgeting Implementation by Public Sector
Construction Firms in Tanzania's Housebuilding Industry: An Exploratory
Study. Journal of Construction in Developing Countries, 29(1), 87-109.
https://doi.org/10.21315/jcdc-10-22-0186
