Review of Capital Budgeting Techniques and Firm Size

Abstract

This study examines the type of capital budgeting methods used by textile firms in Pakistan and impact of firm size on these methods. This study also investigates the relationship between the total assets of the firm and annual turnover of the firm according to primary capital budgeting technique used. Questionnaire method is used as a source of gathering primary data. SPSS is used as tool for analysis of data. Cross tabulation is applied on each variable. Chi square test is also applied to investigate the relationship between total assets of firm and total turnover of the firm according to primary capital budgeting technique used. Findings of this study reveal that net present value method and internal rate of return are two mostly used methods. Findings also show that there is no relationship between the total assets of the firms and turnover of the firm according to capital budgeting technique used by firms. These results are well supported by the literature.

Keywords: Net Present Value, Chi Square, Pakistan