EFFECT OF CAPITAL BUDGETING ON FIRM'S PERFORMANCE IN MANUFACTURING COMPANIES IN KANO, NIGERIA

This study entitled Capital Budgeting decisions and profitability of selected manufacturing companies in Nigeria. The objectives of the study included to; assess how acquisition of long term assets affect the profitability of manufacturing firms, assess how replacement of long-term assets affect profitability of manufacturing firms, and to assess how investment appraisal techniques affect profitability of manufacturing firms in Kano state, Nigeria . The study employed a cross-sectional survey design which was chosen because it enabled the researcher to study the experience of different manufacturing firms. The study used target population of 150 staff of selected manufacturing companies in Kano state Nigeria. Purposive sampling technique was employed and was computed according to Sloven's formula. A self administered questionnaire was designed and distributed to the selected manufacturing companies in Kano state. However, data was collected. entered into a computer and analyzed using Statistical Package for Social Scientists (SPSS). The analysis of the findings indicates that majority of the respondents reported that capital budgeting decisions affects the profitability of the firm, in which respect the manager's objective is to select the combination that yields maximum production at the most reasonable price. Managers must therefore be able to understand costs associated with a particular piece of equipment. Base on the findings the researcher recommended that the governing boards of the selected Manufacturing Companies in Kano, Nigeria ought to embrace Capital budgeting in order to achieve sustainable profitability in their companies. The researcher concluded that the ability to appraise Capital budgeting projects creates a framework for businesses to plan out future long-term direction.