A Retailer Invests $1 Million in a Major Computer Network

question 47

Multiple Choice

A retailer invests $1 million in a major computer network to streamline purchasing,inventory control,bill payments and income control.In which category of investment is this capital expenditure most likely to fit?

• A)replacement of old assets as they wear out
• B)new technology to decrease costs
• C)new investments to increase revenue
• D)the capital investment project does not fit any of the categories

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Definitions:

Gross Profit Margin

The difference between sales and the cost of goods sold, expressed as a percentage of sales, indicating the efficiency of a company in managing its production and labor costs.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company's use of its assets in generating sales revenue.

Assets

Economic resources owned or controlled by an individual or entity that are expected to provide future benefits.

Sales

The process of selling goods or services to customers, typically in exchange for money or other forms of compensation.