CAPITAL BUDGETING AND FINANCIAL PERFORMANCE IN MULTINATIONAL ENTITIES

This study examined the relationship between capital budgeting and financial performance in multinational entities. Capital budgeting is an essential financial management function that involves evaluating and selecting long-term investment projects that maximize shareholders' wealth. Multinational entities operate in highly competitive and dynamic business environments that require substantial investments in fixed assets, technology, research and development, and expansion projects. The study aimed to investigate the impact of capital budgeting techniques on the financial performance of multinational entities. Specifically, the study examined the effect of Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period (PBP), and Profitability Index (PI) on financial performance. The study adopted a survey research design and utilized both primary and secondary sources of data. Data were analyzed using descriptive statistics and regression analysis. Findings revealed that effective capital budgeting practices significantly influence the financial performance of multinational entities by enhancing profitability, return on investment, and organizational growth. The study concluded that multinational entities that adopt sophisticated capital budgeting techniques achieve superior financial performance. The study recommended that multinational entities should continuously adopt advanced capital budgeting methods, regularly review investment decisions, and integrate risk analysis into investment appraisal processes.