{"id":36409,"date":"2015-07-01T21:38:21","date_gmt":"2015-07-01T21:38:21","guid":{"rendered":"http:\/\/vskills.in\/certification\/blog\/?p=36409"},"modified":"2024-04-03T13:18:46","modified_gmt":"2024-04-03T07:48:46","slug":"quality-of-capital-assets","status":"publish","type":"post","link":"https:\/\/www.vskills.in\/certification\/blog\/quality-of-capital-assets\/","title":{"rendered":"Quality of Capital Assets"},"content":{"rendered":"<p style=\"text-align: center\"><a ref=\"magnificPopup\" href=\"http:\/\/vskills.in\/certification\/blog\/wp-content\/uploads\/2015\/07\/Quality-of-Capital-Assets.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-medium wp-image-36453\" src=\"http:\/\/vskills.in\/certification\/blog\/wp-content\/uploads\/2015\/07\/Quality-of-Capital-Assets-300x200.jpg\" alt=\"Quality of Capital Assets\" width=\"300\" height=\"200\" srcset=\"https:\/\/www.vskills.in\/certification\/blog\/wp-content\/uploads\/2015\/07\/Quality-of-Capital-Assets-300x200.jpg 300w, https:\/\/www.vskills.in\/certification\/blog\/wp-content\/uploads\/2015\/07\/Quality-of-Capital-Assets.jpg 380w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><\/a><\/p>\n<p>Good capital budgeting will also improve the timing of asset acquisitions and the quality<br \/>\nof assets purchased. This situation follows from the nature of capital goods and their<br \/>\nproducers. Firms do not order capital goods until they see that sales are beginning to<br \/>\npress on capacity. Such occasions occur simultaneously for many firms. When the<br \/>\nheavy orders come in, the producers of capital goods go from a situation of idle<br \/>\ncapacity to one where they cannot meet all the orders that have been placed. Consequently,<br \/>\nlarge backlogs accumulate. Since the production of capital goods involves a relatively<br \/>\nlong work-in-process period, a year or more of waiting may be involved before the<br \/>\nadditional capital goods are available. This factor has obvious implications for purchasing<br \/>\nagents and plant managers.<br \/>\nAsset expansion is fundamentally related to expected future sales. A decision to buy<br \/>\nor to construct a fixed asset that is expected to last five years involves an implicit fiveyear sales forecast. Indeed, the economic life of a purchased asset represents an<br \/>\nimplicit forecast for the duration of the economic life of the asset. Hence, failure to<br \/>\nforecast accurately will result in over investment or under investmnent in fixed assets.<br \/>\nAn erroneous forecast of asset requirements can result in serious consequences. If the<br \/>\nfirm has invested too much in assets, it will incur unnecessarily heavy expenses. If it<br \/>\nhas not spent enough on fixed assets, two serious problems may arise. First, the firm\u2019sequipment may not be sufficiently modern to enable it to produce competitively. Second,<br \/>\nif it has inadequate capacity, it may lose a portion of its share of the market to rival<br \/>\nfirms. To regain lost customers typically requires heavy selling expenses, price reduction,<br \/>\nproduct improvements, and so forth.<\/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>Good capital budgeting will also improve the timing of asset acquisitions and the quality of assets purchased. This situation follows from the nature of capital goods and their producers. Firms do not order capital goods until they see that sales are beginning to press on capacity. Such occasions occur simultaneously for many firms. When the&#8230;<\/p>\n","protected":false},"author":625,"featured_media":36453,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_joinchat":[],"footnotes":""},"categories":[1519],"tags":[4923,4924,4918],"class_list":["post-36409","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-accounting-banking-and-finance","tag-capital-assets","tag-firmsequipment","tag-investmnent"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Quality of Capital Assets - Vskills Blog<\/title>\n<meta name=\"description\" content=\"Quality of Capital Assets. Apply for a vskills certification in Accounting, Banking and Finance now. 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