Capital rationing

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Capital rationing is a phenomenon that occurs when management places a constraint on the size of the firm's capital budget during a particular period.


Definitions

According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),

Capital rationing. Occurs when management places a constraint on the size of the firm's capital budget during a particular period.

According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),

Capital rationing. The situation in which a firm can raise only a specified, limited amount of capital regardless of how many good projects it has.

According to Managerial Accounting by Braun, Tietz (5th edition),

Capital rationing. Choosing among alternative capital investments due to limited funds.

Related concepts

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