What is the primary goal of capital budgeting?

The primary goal of capital budgeting is to plan and manage a firm’s long-term investments. This involves evaluating potential projects or investments to ascertain their feasibility and profitability over an extended period. Organizations invest significant resources into projects that are expected to yield returns over several years, making it crucial to systematically assess the viability and impact of these investments on overall financial performance.

Through capital budgeting, businesses analyze various factors such as cash flow, risk assessment, and the cost of capital associated with potential investments. This process helps in selecting the best projects that align with the organization's long-term strategic objectives, ensuring efficient allocation of resources, and maximizing shareholder wealth.

The other options relate to different aspects of financial management but do not capture the essence of capital budgeting, which is fundamentally concerned with the long-term investment decisions that shape the future of the organization.