What Is the Process by Which a Firm Considering Acquiring

question 113

Multiple Choice

What is the process by which a firm considering acquiring a new plant or new equipment must decide whether to make the investment,then decide how to raise the funds required for the investment?

• A)zero-based budgeting.
• B)capital budgeting.
• C)annual budgeting.
• D)management by objectives.

---

Definitions:

Gross Profit

The financial result obtained after subtracting the cost of goods sold from total revenue, indicating the efficiency of a company in managing its production and labor costs.

Operating Expenses

Expenses incurred from the normal operations of a business, excluding the cost of goods sold, such as rent, salaries, and utilities.

Sales Revenue

The income received by a company from its sales of goods or services before any costs or expenses are deducted.

Gross Profit Percentage

A financial metric that shows the portion of sales revenue that exceeds the cost of goods sold, expressed as a percentage.