Capital Budgeting, Government Policies and the Performance of SMEs in Nigeria: A Hypothetical Case Analysis
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Ife Center for Psychological Studies
Abstract
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This paper examined capital assets investment decision
of Small and Medium Enterprises in Nigeria using a
hypothetical case. It explored extant literature with
respect to inhibitors to SMEs and their common capital
budgeting techniques and the role of Government
policies in enhancing the business activities of the
citizens. It was found that although, inadequacy of
funds is the most notorious inhibitor to SMEs
development in Nigeria. the inability and lack of skills to
effectively and efficiently allocate those financial
resources can exacerbate their financial crises. The
paper also used a hypothetical example to ex-ray the
importance of using DCF methods of investment
appraisal leading to the conclusion that sound
investment decisions through the application of
appropriate evaluation techniques are critical to SMEs
long term fortune. It therefore recommended the
application of discounted cash flow techniques such as
NPV, IRR or even other more sophisticated methods by SMEs in evaluating their capital projects, as a panacea
to their financial quagmire.
Keywords
JA Political science (General)