Capital Rationing, Ranking, and Funding Constraints

Capital rationing changes project appraisal from a series of independent accept-or-reject decisions into a constrained allocation problem. The company must choose the combination of investments that best supports value and strategy when financing, liquidity, people, equipment, or risk capacity is scarce.

The Capital Rationing guide explains hard and soft constraints, NPV and profitability-index ranking, divisible and indivisible projects, dependencies, timing, and why the highest-ranked individual projects may not produce the best feasible portfolio.

This topic belongs within Capital Budgeting, where forecast cash flows, discount rates, taxes, working capital, terminal value, strategic fit, and execution risk should be evaluated together. The material is educational and does not recommend a project, financing plan, acquisition, or security.

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