Sample Essay
Instead the company should focus on cutting down its costs first and increasing the liquidity of the company. The assets stored in the form of inventory should be freed so that the company is much more flexible and has more ready cash alternatives in hand. This would very help the company considerably in being more competitive and cost effective. After significant cost cutting the company can consider taking up the proposal of investing in the machinery and sourcing it with a bank loan.
The post audit appraisal tends to put the capital investment under a systematic review. The exhaustive analysis of the project/ investment tends to highlight any discrepancies and outliers in the investment project. Through this the project costs are determines much more accurately while the anticipated risks are minimized, the contractors can be evaluated and the project/ investment management can be improved. “A post-audit investigation can potentially have a significant impact on the manner in which future appraisals are conducted. If it is viewed as a learning experience, seeking improvement opportunities, rather than as a witch-hunt of those who have made errors, then real bottom-line benefits are achievable.” (Smith, 2006) Therefore the post audit appraisal directly contributes towards the control of the capital expenditure. The post audit appraisal involves the detailed analysis of the cash flows which contributes towards the efficient management of the investment project thus putting controls on the investment project.
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