The Asset Acquistion Criteria Guide Template covers type of analysis and minimum criteria, which should be completed by the CFO and Capital Budget Committee. It should be completed by listing the following:
Noting in Section I the types of analysis used according to asset type, category, or department (typically more than one method of financial analysis is used to consider asset acquisition);
Standards for approval, such as minimum return on investment or payback period, that can also vary according to the asset type or category; and
Other important factors that should be considered (e.g., fulfills the objectives in the Business Plan).
The CFO and the Capital Budget Committee should establish basic criteria for reviewing the use of the capital budget for the acquisition of assets. While these criteria should be fairly standard, they should also be modified and improved according to the situation and lessons learned. Standard methods of analysis should include methods such as internal return on investment, payback period, and net present value (NPV).