{"id":26149,"date":"2015-03-02T04:47:40","date_gmt":"2015-03-02T04:47:40","guid":{"rendered":"http:\/\/vskills.in\/certification\/blog\/?p=26149"},"modified":"2024-04-03T13:15:49","modified_gmt":"2024-04-03T07:45:49","slug":"capital-expenditure-and-restructring","status":"publish","type":"post","link":"https:\/\/www.vskills.in\/certification\/blog\/capital-expenditure-and-restructring\/","title":{"rendered":"CAPITAL EXPENDITURE AND RESTRUCTRING"},"content":{"rendered":"<p style=\"text-align: center\"><a ref=\"magnificPopup\" href=\"http:\/\/vskills.in\/certification\/blog\/wp-content\/uploads\/2015\/03\/CAPITAL-EXPENDITURE.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-26198\" alt=\"CAPITAL EXPENDITURE\" src=\"http:\/\/vskills.in\/certification\/blog\/wp-content\/uploads\/2015\/03\/CAPITAL-EXPENDITURE.jpg\" width=\"231\" height=\"218\" \/><\/a><\/p>\n<p>What are the various aspects of capital expenditure??<\/p>\n<p>It is fairly common for major investments (e.g., the construction of a new plant) to<br \/>\ndepress operating performance and even lead to operating losses during the first<br \/>\nfew years after they enter service.<br \/>\nFor instance, the construction of a new plant generally leads to:<\/p>\n<p>1)additional general and administrative costs, such as R&amp;D and launch costs,<br \/>\nprofessional fees, etc;<\/p>\n<p>2)financial charges that are not matched by any corresponding operating<br \/>\nrevenues until the investment comes on stream (this is a common phenomenon<br \/>\nin the hotel sector given the length of the payback periods on investments). In<br \/>\ncertain cases, they may be capitalised and added to the cost of fixed assets, but<br \/>\nthis is even more dangerous;<\/p>\n<p>3)additional personnel cost deriving from the early recruitment of line staff and<br \/>\nmanagers, who have to be in place by the time the new plant enters service;<\/p>\n<p>4)lower productivity owing both to the time it takes to get the new plant and<br \/>\nequipment running and the inexperience of staff at the new production<br \/>\nfacilities.<br \/>\nAs a result of these factors, some of the investment spending finds its way onto the<br \/>\nincome statement, which is thus weighed down considerably by the implications of<br \/>\nthe investment programme.<\/p>\n<p>Conversely, a company may deliberately decide to pursue a policy of under-<br \/>\ninvestment to enhance its bottom line (so as to be sold at an inflated price) and to<br \/>\nmaximise the profitability of investments it carried out some time ago. But this type<br \/>\nof strategy of maximising margins jeopardises its scope for value creation in the<br \/>\nfuture (it will not create any new products, it will not train sufficient staff to prepare<br \/>\nfor changes in its business, etc.)<\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"http:\/\/www.vskills.in\/certification\/accounting-banking-and-finance\">Click here for government certification in Accounting, Banking &amp; Finance<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What are the various aspects of capital expenditure?? It is fairly common for major investments (e.g., the construction of a new plant) to depress operating performance and even lead to operating losses during the first few years after they enter service. For instance, the construction of a new plant generally leads to: 1)additional general and&#8230;<\/p>\n","protected":false},"author":600,"featured_media":26198,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_joinchat":[],"footnotes":""},"categories":[1519],"tags":[2105,2110,2444],"class_list":["post-26149","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-accounting-banking-and-finance","tag-capital","tag-expenditure","tag-heavy-investment"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>CAPITAL EXPENDITURE AND RESTRUCTRING - Vskills Blog<\/title>\n<meta name=\"description\" content=\"What are the various aspects of capital expenditure?\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.vskills.in\/certification\/blog\/capital-expenditure-and-restructring\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"CAPITAL EXPENDITURE AND RESTRUCTRING - 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