A Study on Capital Budgeting with Reference to SKS Automobiles, Salem

Capital budgeting is a critical financial management tool that enables organisations to evaluate long-term investment decisions. This study examines the capital budgeting practices of SKS Automobiles, a certified Mahindra & Mahindra dealer based in Salem, Tamil Nadu. Using secondary data drawn from the company’s annual reports for 2020–21 to 2024–25, the research employs ratio analysis, trend analysis, compound growth rate (CAGR), and the Accounting Rate of Return (ARR) to assess financial performance. Key findings reveal that total capitalisation peaked at ₹7,692.16 lakhs in 2022–23, EPS improved significantly to ₹145.57 in 2024–25, and the debtor turnover ratio reached 21.02 times, indicating efficient debt collection. The current ratio, however, remained below the ideal 2:1 norm throughout the study period. The ARR showed improvement, reaching 0.22 in 2024–25, while the CAGR of sales over the five-year period was calculated at 12.22%. The study concludes that SKS Automobiles demonstrates sound capital management with scope for improving liquidity.