Importance of Ethics in Capital Budgeting - MyAssignmenthelp.com

Question: Discuss about theImportance of Ethics in Capital Budgeting. Answer: Relevance of Ethics within Capital Budgeting Capital budgeting is deemed a vital aspect that supports a company in improving its financial performance and ensuring income increase of a company in the future years. Additionally, ethical techniques in capita budgeting processes support a company to employ financial resources effectively, which can result in increased profitability. The vital features of ethical consideration need to be contemplated for boosting a companys profitability. Vital factors encompass responsibility, decency as well as fair accounting has to be comprehended in confinements of ethical capital budgeting. Heinicke, Guenther Widener (2016) indicated that necessary ethical measure use in capital budgeting can highly facilitate in developing suitable budget that is likely to support an organizations business activities. It can be stated that total capital budget signifies all vital measures that must be accepted by management for offering superior funds for all business activities of company. Several unethical measures used in capital budgeting preparation can result in non-distribution to several vital resources. This can result in decrease of profitability of an organization. Conversely, capital budget can follow ethical consideration for the reason that an organization can improve overall viability of an organizations budget. Ethical capital budgeting supports a company to take into account forecasted cash inflows, expenses, and project evaluation and control expenses. Needles, Powers Crosson (2013) signifies that capital budgeting can also support a company to find out all the real expenses experienced by a company. References Heinicke, A., Guenther, T. W., Widener, S. K. (2016). An examination of the relationship between the extent of a flexible culture and the levers of control system: The key role of beliefs control. Management Accounting Research,33, 25-41. Needles, B. E., Powers, M., Crosson, S. V. (2013).Principles of accounting. Cengage Learning.