Application of capital budgeting methods in small and medium-sized enterprises : case studies of SMEs in Vietnam
Nguyen, Dung (2019)
Nguyen, Dung
2019
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-201905159946
https://urn.fi/URN:NBN:fi:amk-201905159946
Tiivistelmä
Many researches in the past studied capital budgeting in Small and medium-sized enterprises (SMEs), showing that unlike large corporates, small businesses apply different methods in their capital budgeting decision. Previous research’s findings results that Discounted cash flow method is not commonly favoured by SME’s owner and manager. Based on the past findings, this thesis expands its researching to study how SMEs apply methods to determine a capital budgeting decision in a developing country. The paper is a qualitative research to be implemented in Vietnam, a developing economy. The thesis aims at finding out the reality of applying appropriate methods in making capital budgeting decisions in SMEs in Vietnam.
From the interviews with CEOs of three SMEs in different industries, the thesis is finally able to collect qualitative data and draw a picture of how SMEs in Vietnam apply capital budgeting methods to determine a project investment. The major findings of research show that (1) under a context of developing economy, SMEs express the positive attitude towards opportunities from the economy as well as illustrate their business activities with both successful growth and future development; (2) when appraising a project investment, SMEs do not have an unprofessional capital budgeting process and only calculate critically necessary steps and evaluate the feasibility of project investment; and (3) SMEs give no exact name for methods and techniques in capital budgeting and they apply a various combination of calculation from different techniques such as NPV, PB, PI to forecast revenue and expenditure of project, not fully focus on a specific technique or method.
From the interviews with CEOs of three SMEs in different industries, the thesis is finally able to collect qualitative data and draw a picture of how SMEs in Vietnam apply capital budgeting methods to determine a project investment. The major findings of research show that (1) under a context of developing economy, SMEs express the positive attitude towards opportunities from the economy as well as illustrate their business activities with both successful growth and future development; (2) when appraising a project investment, SMEs do not have an unprofessional capital budgeting process and only calculate critically necessary steps and evaluate the feasibility of project investment; and (3) SMEs give no exact name for methods and techniques in capital budgeting and they apply a various combination of calculation from different techniques such as NPV, PB, PI to forecast revenue and expenditure of project, not fully focus on a specific technique or method.