What does the capital budget outline in business finance?

The capital budget is a comprehensive financial plan that outlines the planned expenditures on fixed assets. This is crucial for businesses as it allows them to allocate funds effectively for significant investments, such as purchasing new machinery, building facilities, or upgrading technology. By identifying and budgeting for these fixed assets, a company can ensure it is making informed decisions about which projects to undertake, ultimately striving for growth and improved operational efficiency.

In contrast, while projected profit margins, employee training costs, and cash flow from investments are important components of a business's financial strategy, they do not specifically pertain to the capital budget. The capital budget focuses solely on long-term asset investments, making it a vital tool for strategic financial planning and ensuring the business's future viability.