Budgeting Methods Research Articles

Capital Budgeting Methods and Practices: Evidence from Privately Owned Firms in Pakistan

The aim of this research paper is to study the degree of using capital budgeting methods on choosing the appropriate project for investment by privately owned firms in Pakistan. We surveyed 58 chief executive officers (CEOs) of privately owned firms. Our survey contained fifteen questions to explore capital budgeting and cost of capital. The study covers the period from September, 2018 to May, 2019. Firms rely heavily on IRR as a project evaluation method. According to cost of capital methods, average historical rate of return on common stock is mostly used by the firms. The regression test showed significant relationship between firm characteristics with respective to the use of capital budgeting techniques and cost of capital methods.

Analysis of Capital Budgeting Decision-Making Using the Electre Decision Support System Method (Case Study on Export-Oriented Msmes: PT. Mekar Saluyu Group)

The era of globalization brought about a significant transformation in international trade, allowing for greater participation of MSMEs. However, even though Indonesia has the largest number of MSMEs in ASEAN, the percentage of MSMEs involved in exports is still low. Various factors hinder the expansion of MSMEs to the international market, including financial management constraints. To overcome these challenges, strengthening strategies are needed, such as fostering a conducive business environment, increasing access to capital, and developing infrastructure. In the context of financial strengthening, it is important for MSMEs to understand capital financing strategies and financial decision-making. The capital budgeting method is crucial in determining investment projects that can increase profitability and expand business. To facilitate proper decision-making, the use of integrative techniques in capital budgeting is important. One method that can be used is the ELECTRE Decision Support System (SPK), which helps to develop investment alternatives based on certain criteria to facilitate decision-making. This study will apply the capital budgeting method and SPK ELECTRE to assist companies in choosing investment options for curly chili or sweet potato plants using five calculation criteria, this study aims to provide guidance for MSMEs in making the right financial decisions.

Short-term effect of the harvesting method on ecosystem carbon budget in hemiboreal Scots pine forest: Shelterwood cutting versus clear-cut

Shelterwood cutting (SC) has been highlighted as an alternative method to clear-cut (CC)-based even-aged forest management. However, compared to CC, the effect of SC on stand carbon (C) balance is still poorly understood at the ecosystem level. We examined the prompt effect of SC versus CC on ecosystem net primary production (NEP) on a short-term scale, using the C budgeting method combined with eddy covariance (EC) measurements in hemiboreal mature Scots pine stands.The early effect of SC on annual C budget after removing 30–40 % of the growing stock revealed diverse patterns in the studied stands; NEP varied from 0.62 to −1.3 t C ha−1 yr−1 for the C sink and the C source, respectively. However, C loss decreased already in the second post-thinning year and levelled out attaining −0.41 t C ha−1 yr−1, which is close to balance.Furthermore, C loss declined in the second post-harvesting year at the CC sites as a result of the increased production of the ground vegetation and the decreased soil heterotrophic respiration (Rh) flux. However, C loss from dry mesotrophic clear-cuts was almost −1.8 t C ha−1 yr−1 for both study sites. Since estimation of the individual C fluxes for C budgeting is associated with variability-induced errors, the estimated values of NEP contain uncertainties of various levels.The estimated annual cumulative Rh flux was significantly higher in the SC versus CC areas and the mean annual Rh values across the study sites were 3.57 ± 0.25 and 2.59 ± 0.09 t C ha−1 yr−1, respectively.Annual estimated NEE after SC was 1.8 ± 0.52 t C ha−1 yr−1, gross primary ecosystem production was 9.28 ± 0.97 and total ecosystem respiration was 7.47± 0.28 t C ha−1 yr−1. The discrepancy between the estimated values of NEE and NEP was 1.2 t C ha−1 yr−1.In the short term SC demonstrated some advantage over CC from the perspective of the C cycle, but the difference in NEP values between the SC and CC treatments was not convincingly overwhelming. Hence, SC allows to maintain the forest cover for a longer period and to avoid drastic changes in the landscape; still, after SC, C budget varied between the C sink and the C source.

Integrated Strategic Management for Drug Eradication: Insights from Undercover Buying Method at Mount Puyuh Police Substation

The relentless circulation of drugs within communities presents a pressing global challenge, necessitating precise eradication strategies. This study investigates the strategic management of drug eradication through the employment of the undercover buying method at the Mount Puyuh Police Substation. Drawing upon qualitative research methods including interviews, observations, and document analysis, this research delves into the integrated strategic management practices employed in combating drug abuse. Findings underscore the critical role of strategic management encompassing human resources, budgeting, and execution methods in the success of drug eradication operations. Through in-depth analysis, the effectiveness of the undercover buying method in gathering accurate intelligence and its impact on operational efficiency are elucidated. Discussion of these findings emphasizes the importance of integrated strategic management in drug eradication efforts, with practical implications including the development of more effective policies, targeted resource allocation, and enhanced public awareness campaigns. In conclusion, well-integrated strategic management holds the promise of achieving greater scale and effectiveness in drug eradication operations. The implications of this research highlight the ongoing need for refinement and advancement in sustainable drug eradication strategies

Cost-benefit Analysis of Adopting Blockchain Technology in the Radiology Unit of a District Hospital

Background Blockchain technology has better security and immutable features, which are beneficial for healthcare data management. Decentralisation data management allows better sharing of medical images between units and departments. Objectives The objectives of this study were to determine the cost of adopting the blockchain-based system for medical images and the cost-benefit analysis for five years of adoption of this technology at a district hospital in Malaysia. Methodology Data regarding the yearly costs and workload for 2016 until 2018 were collected from a district hospital in Malaysia. The cost of blockchain implementation was obtained from a company that developed this technology. The cost-benefit analysis was done using the capital budgeting method for five years of this technology adoption. Sensitivity analysis was done to assess uncertainty conditions during this adoption. Results The total yearly cost of Radiology Unit for 2018 was MYR490,168.96. The cost for adopting blockchain technology was MYR80,000 for the software, MYR115,000 for upgrading the assets and yearly maintenance cost was MYR16,000. The total present value of net benefits for five years of technology adoption was MYR865,295.01. Sensitivity analysis shows that consumables cost-saving is the most sensitive variable. Most pessimistic situation analyses showed positive net benefits. Conclusion The adoption of blockchain technology in managing medical images offers numerous benefits to public hospitals in Malaysia. Investment in this technology can provide a good return to the organisation.

Exploring the Evolution of Budgeting Practices from Traditional to Technology

Purpose: This study explores the evolution of budgeting practices from traditional to contemporary technology-driven approaches. It examines how technological advancements and organizational changes have transformed budgeting processes, highlighting the shift towards more flexible and data-driven methodologies. Research Design and Methodology: This study embarks on a journey of comprehensive literature review using a qualitative research approach. The methodology involves systematic searches of academic databases, thematic analysis and synthesis of findings from relevant studies. The research focuses on the design, implementation, and impact of both traditional and modern budgeting practices, as well as the challenges associated with technological adoption. Findings and Discussion: The findings reveal that traditional budgeting methods, characterized by hierarchical and fixed targets, must be revised in dynamic business environments. Technological innovations, such as ERP systems and cloud-based platforms, significantly improve efficiency, accuracy, and decision-making. Alternative frameworks like the Balanced Scorecard and Beyond Budgeting promote strategic alignment and organizational agility. However, challenges such as data security, integration complexities, and resistance to change remain significant barriers to full adoption. Implications: This study's findings have direct and practical implications for financial managers and policymakers seeking to optimize budgeting processes. Investing in robust data infrastructure and fostering a culture of continuous improvement is essential for leveraging the benefits of technological innovations. Future research should focus on the long-term impacts of these practices and explore strategies to overcome implementation challenges. This will help organizations achieve greater agility, responsiveness, and competitiveness in an increasingly digitalized business landscape.

PLANNING PROGRAMMING BUDGETING SYSTEM (PPBS) AND CONTROL OF PUBLIC SECTOR ORGANISATIONS: A COMPARATIVE STUDY OF INDUSTRIALIZED AND EMERGING ECONOMIES

Public sector organizations play a critical role in the economic and social development of both industrialized and emerging economies. The Planning, Programming, Budgeting System (PPBS) and Control is a management approach that has been widely adopted to enhance the effectiveness and efficiency of resource allocation and utilization in public sector organizations. This study provides an overview of the key principles and practices of PPBS, and it highlights the differences and similarities in its implementation in industrialized and emerging economies. In these contexts, PPBS is often used to enhance fiscal discipline, promote equity in resource distribution, and reduce corruption. The focus is on short-term planning and basic budgeting practices, with a greater reliance on traditional input-based budgeting methods. While there are clear differences in the sophistication and maturity of PPBS in industrialized and emerging economies, both share common goals, including improved governance, enhanced service delivery, and efficient resource utilization. Furthermore, many developing economies are gradually adopting elements of the PPBS from their developed counterparts, incorporating best practices and adapting them to their specific circumstances. This study underscores the importance of considering the unique context and challenges that public sector organizations face in industrialized and emerging economies when implementing PPBS. It also highlights the potential for cross-learning and knowledge transfer between these two groups, contributing to the continued evolution and improvement of public sector management practices worldwide. KEYWORDS: Budgeting; Control; Industrialized economies; Emerging economies; Public sector organization; Planning programming budgeting system

МЕТОДОЛОГІЧНІ ЗАСАДИ, МЕТОДИ ТА ІНСТРУМЕНТИ УПРАВЛІНСЬКОГО ОБЛІКУ

The article is devoted to the study of methodological foundations, methods and tools of management accounting and its practical implementation in the activities of enterprises in order to improve the information support of managers and managers of enterprise. It has been found that management accounting is a separate accounting system, which is a subsystem of the general enterprise management system and provides for the collection, processing of information received from various departments about the status and performance of the enterprise, which provides the ability to make managerial decisions and effectively manage costs, assets, profits of enterprise. The methodology and complex of methods used in the process of management accounting and ensuring the consistency, accuracy, and effectiveness of its implementation are studied. Three groups of methods of management accounting have been researched and generalized: general methodological methods, general scientific methods and specific methods. It has been found that general methodological methods are characteristic of the study of a wide range of objects, such methods include observation, comparison, analysis and synthesis. General scientific methods of management accounting are general methods that are used, including in accounting, these are: accounting accounts; double entry; Inventory; documentation forms; depreciation, calculation, and others. Specific methods of management accounting provide tools for solving specific management problems, these include methods that are different in terms of cost and include accounting by actual cost indicators (direct costing) and accounting by standard cost indicators (standard costing), as well as SWOT analysis, balanced scorecard, budgeting, benchmarking and other methods. It has been found that economic and mathematical methods of studying the cost of products and services have become widely used in the implementation of management accounting in order to identify the relationship between the cost items in the cost and the profitability of its production. It has been found that the organization of management accounting at the enterprise should be carried out in compliance with the following principles: consistency; analyticality of information; use of primary information; periodicity; consistency; integrity; economy; balance; responsibility; transparency.

Economics of Organic and Non-Organic Vegetable Production among Small Holder Farmers in Cross River State

This study was conceptualized to analyze the cost and returns of organic and Non- organic farming among small holder fluted pumpkin farmers in Cross River State. A multistage sampling technique was employed in the selection of location and respondents. The data were collected from 240 organic and non-organic small holder fluted pumpkin farmers. The primary instrument used for data collected was structured questionnaire. Data obtained was analyzed by Enterprise budgeting method, Anova and descriptive statistics. Results indicated that the profit realized by organic fluted pumpkin farmers in Cross River State was N 108,060, while the profit of Non-organic was N145,480. The results of socio-economic characteristics of fluted pumpkin producers showed that majority (65.42%) were in Age bracket of 31-50 years. Majority (65.75%) of the respondents were female, (70.83%) were married, majority (97.92%) were literate, average farm size was 0.8 hectare, (82.50%) of household size were in the range of (6-9) and average years of experience of 9 years. The study therefore suggests that farmers should be trained as often as possible.

Economic Analysis Of Production Technologies Of Watermelon (Citrullus Lanatus) Among Smallholder Farmers In Akwa-Ibom State, Nigeria

The study was carried out to analyze the economics and production technologies of water melon among small holder farmers in Akwa- Ibom State. Multistage sampling technique was used in data collection. The data were collected from 240 organic and non-organic small holder watermelon farmers. The primary instrument used for data collected was structured questionnaire. Data obtained was analyzed by Enterprise budgeting method, Anova and descriptive statistics. The technologies used in the study area in water melon production were Organic and Non-organic (conventional system). The total revenue and the gross margin of conventional water melon producers realized per farmer per annum were N407,000 and N207,000 respectively, while the total revenue and gross margin for organic water melon producers were N562,385 and N433,141 respectively. The study suggests that awareness should be created by the extension officers on the use of organic farming technology.

Investing in Green Energy: Profitability Analysis of Solar Energy for Household Consumption in Albania

Exhaustion of conventional non-renewable energy sources together with climate change mitigation presents challenges for policy makers globally. An alternative to address the increased demand for energy with less negative impacts on the environment is using renewable energy sources whose reserves are supplemented by natural ecosystems. Furthermore, EU directives impose actions on Member States for the reduction of pollution from conventional sources. Countries must aim to increase the share of renewable energy sources in energy consumption, as significant measures towards sustainable development. However, several factors affect the succession of green energy adoption, where financial considerations remain key determinants in decision-making by companies, families, and institutions. The study conducts a cost-benefit analysis using methods of capital budgeting to evaluate the profitability of solar energy for household consumption in Albania. The paper aims to provide insights into the potential of green energy investment in Albania, focusing on the solar energy sector and financial factors that are relevant to these investments’ succession. Data analysis and forecasting are conducted for a lifespan of 30 years, assessing average data of electricity prices, the productivity of solar panels, direct costs of investment, interest rates, exchange rates, and inflation rates. The study concludes that investing in solar panels for household consumption in Albania is profitable, as it is reported that discounted benefits exceed the investment cost.

Kelayakan Bisnis Finansial Produksi Implan Biomedis Dengan Menggunakan Proses Manufaktur Aditif

The market size of medical implant in Indonesia is estimated around US$ 20 million in 2021 and will reach a value US$ 36,67 million by 2026 with 15.2% CAGR. Furthermore, the total medical implant market size in Asia was estimated US$ 7.302 million and is expected to growth become US$ 10,610 million in 2026. Those number bring medical implant business become very attractive market potential to be developed and produced in Indonesia, to meet local demand as well as for Asia market. The feasibility study is carried out using capital budgeting method by analyzing result of net present value (NPV), internal rate of Return (IRR), payback period (PP) and profitability index (PI). In addition, sensitivity analysis is performed to assess the susceptibility of the NPV result toward change in the variables input. Based on the analysis, the investment project is feasible and accepted where the NPV is USD 6.252.653, IRR 35%, and payback period 3,7 years. Sensitivity analysis also reveals that this project exhibits a relatively low susceptibility to variable uncertainty where NPV is still positive when subjected to various variables changes. Sales volume and selling price are variables that greatly influence into the change of NPV result into ±37% variance where 20% increase of sales volume in each period will dramatically increase the NPV into USD 8.584.201. Meanwhile 20% reduction of sales volume will reduce the NPV into USD 3.919.321.

Task-Based Budgeting in Environmental Projects Planning: A Case Study of a Manufacturing Company in Poland

In this paper most important differences between performance budgeting and traditional budgeting were presented. The aim of this paper is to focus only on selected differences. The conducted case-study in Poland reveals that activity-based budgeting is an effective method of financial management. Traditional budgeting is implemented according to older concepts. These rules are not compatible with the demands of modern budgeting. Unfortunately, the traditional budgeting method is widely used in public sector in Poland. It is also quite often used in commercial enterprises. The traditional method of budgeting is easier and quicker to implement. Thus, it is popular. On the other hand, it does not allow to achieve positive effects of activity-based budgeting.

Perancangan Implementasi Green Budgeting Pada PT. ABC Menuju Green Company

Sustainable development is increasingly being developed in this century and to support this green economy approach has been developed. Companies that are aware of this starting to contribute and add environmental management aspects to the strategy roadmap and to accommodate this program budget allocation is required for its implementation. Responding to this, green budgeting methods are now being applied to many institutions. Green budgeting is a budgeting paradigm that prioritizes elements of environmental in the processes of preparation, implementation, monitoring and evaluation. Green budgeting allows organizations to use budgets as a tool to support the achievement of environmental goals. The theory and concepts used is green budgeting based on OECD. This study aims to provide the framework that related to apply the green budgeting concept that is fit with the conditions of the company. This research uses qualitative methods based on case study analysis of manufacturing company. The data used obtained from interviews and documentation that related to the company's budgeting process and green company roadmap. The results show in making the framework design, PT. ABC already has strategic goals related to environmental management which is directed from shareholders and long-term corporate plan. To implement this concept, the company has policy that related such as Blueprint green company document and to report the progress, company has media such as management reports and sustainability reports to inform realization of the program. Then, if this concept is applied, tagging mechanism related with environmental management is needed in preparing the company's annual budget.

Доступность бюджетных инвестиций для регионов при программно-целевом подходе к формированию бюджетов (на примере муниципальных образований Архангельской области)

The article is devoted to the study of the availability of investment funds for the regions of investment funds of state development programs in the context of the program-targeted approach to budget formation. The use of program-targeted budgeting methods undoubtedly opens up extensive opportunities for optimizing the public finance management system, but the management tools and implementation mechanism at the regional level have not yet been sufficiently developed, which reduces the effectiveness of their application. The paper evaluates the uniformity of distribution of funds of the Targeted Investment Program of the Arkhangelsk Oblast for the period 20172021 between four districts that are similar in their parameters, as well as the distribution of budget investments within the framework of inter-budget transfers to local budgets of the Arkhangelsk Oblast for the period 20212023. The process and principles of a program-targeted approach to strategic planning and management of the public finance system as the main tool for improving the efficiency of budget expenditures are considered. The methods used in the study include analyzing the dynamics and structure of budget investment distribution, drawing conclusions on the basis of the obtained data about the uniformity of funds distribution and investment accessibility for the regions. This article can be useful for assessing the availability of budget investments when using the program-targeted approach to budget planning, as well as for developing an effective mechanism for implementing program-targeted budgeting approaches in the budget process at the local and regional levels.

Yatırım Projesi Değerlendirilmesinde Kullanılan Sermaye Bütçelemesi Yöntemleri: Türkiye’nin 500 Büyük Sanayi Kuruluşu Örneği

The main aim of this study is to determine the capital budgeting methods preferred by Turkey's Top 500 Industrial Enterprises when evaluating their investment projects and the usage rates of the capital budgeting techniques. Also, it is aimed to determine the relationship between the capital budgeting methods preferred by both Turkey's Top 500 Industrial Enterprises and companies whose stocks are traded in Borsa Istanbul and firm size, exports, year of establishment, financial risk, education level of managers, sector, and firm performance. The study made use of a questionnaire survey. The survey was used as the data collection method in the study and the survey questions were applied to 500 Largest Industrial Enterprises of Turkey announced by the Istanbul Chamber of Industry in 2018, in 2020. The association between the obtained data was shown using logistic regression analysis. The findings indicated that a statistically significant relationship was determined between the education level, sector and firm age in both Turkey's Top 500 Industrial Enterprises and the companies whose stocks are traded in Borsa Istanbul (Istanbul Stock Exchance), and the preferred methods. However, there is no significant relationship was found between the methods preferred by the companies in Turkey's Top 500 Industrial Enterprises and the firm size, there is a significant relationship was found between the methods preferred by the companies whose stocks are traded in Borsa Istanbul and the firm size. A significant relationship was determined between the export and the methods preferred by the companies in Turkey's Top 500 Industrial Enterprises, but a significant relationship was not found between the companies whose stocks are traded in Borsa Istanbul and their export and firm performance.

Budgeting in Healthcare Systems and Organizations: A Systematic Review.

Budgeting is the process resource allocation to produce the best output according to the revenue levels involved. Among the constraints that healthcare organizations, including hospitals, both in the public and private sectors, grapple with is budgetary constraints. Therefore, cost control and resource management should be considered in healthcare organizations under such circumstances. We aimed to identify methods of budgeting in healthcare systems and organizations as a systematic review. To extract and analyze the data, a form was designed by the researcher to define budgeting methods proposed in the literature and to identify their strengths, weaknesses, and dimensions. The search was conducted in Google Scholar, Web of science, Pub med and Scopus databases covering the period 1990-2022. Overall, 33 articles were included in the study for extraction and final analysis. The study results were reported in four main themes: healthcare system budgeting, capital budgeting, global budgeting, and performance-based budgeting. Each budgeting approach has its own pros and cons and requires meeting certain requirements. These approaches are selected and implemented depending on each country's infrastructure and conditions as well as its organizations. These infrastructures need to be thoroughly examined before implementing any budgeting method, and then a budgeting method should be selected accordingly.

Comparison of capital budgeting methods: NPV, IRR, PAYBACK PERIOD

In the era of globalization, every company is required to have high competitive ability because the competition that must be faced by companies will be increasingly stringent. In this study discusses whether or not the investment that will be made by the company is feasible. Calculation of the feasibility of this investment using the Capital Budgeting method. Based on the application of Capital Budgeting, methods that are generally used to analyze an investment project include Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period (PP). Capital budgeting analysis is very helpful for companies in conducting research and analysis regarding the feasibility of an investment project planned by the company.

CSR Program Social Return on Investment Analysis Case Study: PT PLN Indonesia Power PLTGU Cilegon OMU

Responsibility and sustainability play a larger role in the activities of global businesses. The practice of Corporate Social Responsibility (CSR) can be used to promote more responsible and sustainable behavior. PT PLN Indonesia Power PLTGU Cilegon OMU is a sub holding of an Indonesian state-owned corporation committed to fostering a responsible and sustainable culture through CSR. The old CSR program in Margasari village, the company’s first ring area, must be replaced because it has come to its exit time. Based on the Social Mapping Document 2022 and interviews, a SWOT analysis is conducted taking into account the current situation of the community. The analysis indicates that a new sewing group named Pujasari could be implemented as the new CSR program in the village of Margasari. Nevertheless, since a CSR program is a social investment, the company must be confident in the program’s future return for the community. This study aims to determine the program’s economic feasibility, Social Return on Investment (SROI) value, variables that may influence SROI achievement, and contribution to the Sustainable Development Goals (SDGs). In calculating SROI, the triple bottom line concept will be used, while the economic feasibility will use capital budgeting method. A sensitivity analysis will be conducted to determine the critical variable for achieving SROI. The study demonstrates that the calculation utilizing the triple bottom line concept (considering economic, social, and environmental benefit) over a 5-year project period yields an NPV of IDR 1,988 mio, an IRR of 109%, with a WACC of 13.349%. The program’s SROI is 20.39, indicating that for every IDR 1 invested by the company in this program, IDR 20.39 in social benefit will be generated. Analysis of sensitivity reveals that WACC, the selling price of rags, working productivity, and price of rag primary materials are, in order, the most sensitive variables affecting the project’s SROI value. In addition, the program demonstrates contribution to SDGs 1, 5, 8, 12, and 13.

Analisis Proyeksi Keuangan melalui 2P (Pay for Perfomance dan Pay for Position) dalam Penyejahteraan Pegawai di Pondok Pesantren Darullughah Wal Karomah

The quality of human resource performance was influenced by the welfare of human resources that can be provided as salaries/income to employees. Several theories are used to determine employee salaries or income, including pay for performance and position theory. In determining employee salaries, reasonable financial projections are needed in educational institutions. One projection method that can be used is the Capital Budgeting method, utilizing a profitability index model. The method used in this study is descriptive analytics by using a profitability index model to calculate projections and considering Pay for Performance and Pay for Position on pesantren expenditure items. The subject of this study was the management of Darullughah Wal Karomah Islamic Boarding School, namely the head, treasurer, head of staffing, and principal under the auspices of the pesantren with stages of data collection through interviews and document studies, implementation of analysis, and focus group discussion. Based on the calculation of pay for performance and pay for position and combined with the results of calculating the profitability index, it was found that the form of awards in the form of income that is suitable for use by pesantren is the use of pay for position theory for pesantren administrators and pay for performance for teachers and education staff. The results of this research can be used as a basis for Islamic boarding schools to compile guidelines for providing income to employees.