The article discusses the limitations of capital budgeting techniques used by firms to evaluate and select projects. It highlights that NPV (Net Present Value) has a main limitation in that it relies on the concept of discount rate, which is difficult to identify accurately. This may lead to wrong project selection if incorrect assumptions are made. Payback period is another method that does not consider present value and can be misleading as business conditions are dynamic. The article concludes that firms must conduct ratio analysis regularly to monitor their performance and make informed decisions. While there are limitations to these techniques, they can still be used effectively with caution.