A Capital Expenditure Ratio Greater Than 1

question 55

True/False

A capital expenditure ratio greater than 1.0 indicates the company was able to generate enough operating cash to cover investments in property,plant and equipment.

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Definitions:

Sunk Costs

Costs that have already been incurred and cannot be recovered, and should not affect future business decisions.

Irrelevant Costs

Costs that will not be affected by a decision and should not be considered when making that decision.

Periodic Basis

A method of accounting where financial and inventory records are updated at regular, fixed intervals.

Resale Value

The expected price at which an asset can be sold in the market after it has been used.