Capital budgeting is a process to plan spending on big projects to make a company more profitable in the long run. It involves choosing projects that will bring in money over many years, even though a lot of money is needed upfront. The decision to invest in these projects is based on financial analysis. The Finance Manager uses tools to help make these decisions. Cash flow, which is the money coming in minus the money going out because of the investment, is a key factor in deciding whether to invest in a project.