What are capital budgeting criteria used for?

Capital budgeting criteria are utilized to evaluate potential investments or projects to determine whether they will add value to an organization. This process involves assessing the expected cash flows, costs, risks, and overall financial implications of potential projects to ensure that funds are allocated efficiently. By focusing on how a project may contribute to the company's profitability and growth, organizations can make informed decisions about which projects to pursue.

In contrast, measuring a company's current stock prices primarily relates to market valuation and investor sentiment rather than project evaluation. Evaluating ongoing expenses focuses on the management of current operations rather than new investments. Managing employee relationships falls within human resource management and does not pertain to the assessment of capital projects. Thus, the purpose of capital budgeting is specifically connected to understanding and enhancing a company's value through strategic investment choices.