Capital allocation is the process of deciding how to invest money in a way that maximizes returns for a business or individual. It is a specialized skill that requires analytical and strategic thinking, financial knowledge, and a deep understanding of risk and return. Capital allocation decisions can range from choosing between investment options, to deciding how much money to invest in a specific project, to determining how to allocate resources across different business functions. Successful capital allocation is critical for long-term success and sustainability, and can have a significant impact on a company's financial performance.
Have feedback on this skill? Let us know.