Capital Budgeting Practices: Evidence From Sri Lankan Listed Companies
Capital budgeting one of the most important functions of corporate finance. The present study examined the capital budgeting practices of Sri Lankan companies. The survey sample included 44 Sri Lankan listed companies covering five major sectors. We found that discounted as well as non-discounted methods are equally used by the Sri Lankan companies for the capital budgeting decisions. According to the data gathered by the survey, majority of the respondents (80%) used NPV, IRR and Payback as their important or very important capital budgeting method. It is worth to notice that fair number of respondents use Real Option techniques for the capital budgeting decisions.
Key Words- Capital Budgeting, Net Present Value, Internal Rate of Return, Payback