- There are many factors that an organization has to analyze before investing.
“ If any of you lacks wisdom, let him ask God, who gives generously to all without reproach, and it will be given him” (James 1:5) ESV.
- Making decisions frequently comes with taking risks.
“ For I know the plans I have for you, declares the Lord, plans for welfare and not for evil, to give you a future and a hope” (Jeremiah 29:11) ESV.
THE INVESTMENT CAPITAL BUDGETING DECISION
- Investment capital budgeting decisions involve tangible assets that you can touch, as well as intangible assets such as research and development, and designs for the product.
- Most of the investments have long-term consequences for the corporation.
- Decision making is one of the core competencies of leadership
- Financial managers are in charge of raising the money that the firm requires for investment.
- One example is Nehemiah, he was asked to raise an army and take down the walls of the city (Nehemiah 1:1-11) ESV.
- Nehemiah knew that all wisdom comes from God
- Psychological theory with traditional economics and finance to supply an explanation for why people make irrational financial decisions.
“When the righteous cry for help, the Lord hears and delivers them out of all their troubles. The Lord is near to the brokenhearted and saves the crushed in spirit. Many are the afflictions of the righteous, but the Lord delivers him out of them all. He keeps all his bones; not one of them is broken.” (Psalm 34:17-20).
There are three broad areas such as:
- Attitudes to risk
- The way that they assess probabilities
- Sentiment about the economy
Attitudes toward risk
A Christian's attitude should seek to things of god with their heart and their spirit. The bible says “And without faith it is impossible to please him, for whoever would draw near to God must believe that he exists and that he rewards those who seek him.” (Hebrews 11:6) ESV.
- Set their heart to seek after wisdom.
- Pursue the will of God for their life.
“We should always be looking after his own welfare, but rather let each one seek the good of others.” (Corinthians 10:24) ESV.
“Stop looking after your own interest only, practice looking out for the interests of others too.” (Philippians 2:4) ESV.
God says that we should not be concerned about ourselves but we have to be more concerned about people who are around us and how we can help them if we have the ability.
Beliefs about probabilities
- Christian beliefs should not be sidetracked simply because of an alternative possibility. Christians should think about the ethical and helpful alternative so they can choose wisely among all their options.
“Therefore the Lord himself will give you a sign. Behold, the virgin shall conceive and bear a son, and shall call his name Immanuel.” (Isaiah 7:14) ESV.
The bible says “Do not be conformed to this world, but be transformed by the renewal of your mind, that by testing you may discern what is the will of God, what is good and acceptable and perfect.” (Romans 12:2) ESV.
Making business and spiritual decisions comes down to a few pertinent points:
- What to invest in
- Resources needed to make the investment.
- Risk tolerance
- Monitoring growth
Without wisdom the other factors are “skating on thin ice.” Seeking wisdom from God in our business and spiritual decisions will keep us on a steady foundation
Some decisions have a short-term effect, but many decisions cause a business or our lives to change for an extended period of time
When making a decision it is important to monitor the effects of that decision to see if adjustments are needed