What Is It Called When a Firm Limits Capital Expenditures?

1 FINANCE MCQS

The situation where a firm limits its capital expenditures is called ____________?

Optimal rationing
Capital rationing
Marginal rationing
Transaction rationing

Correct Answer: B. Capital rationing

Detailed Explanation

When a firm sets a limit on the total amount of funds available for investment in projects, it is called capital rationing. This usually happens when there is a shortage of funds or when management wants to prioritize the most profitable projects.

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The situation where a firm limits its capital expenditures is called ____________?

The situation where a firm limits its capital expenditures is called ____________?

Detailed Explanation

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In cash flow analysis, two projects are compared using a common life approach, which is classified as…

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