Changes in a company's capital expenditures or fixed asset sales over time must
A)be carefully analyzed for changes in the company's strategy.
B)be indicative of changes in the company's strategy.
C)indicate incompetent management.
D)raise the company's risk of default on its debt.

Question

Quizplus · Accepted Answer

Changes in capital expenditures or fixed asset sales over time can indicate a shift in a company's strategy, such as a move towards expansion or contraction. As such, it is important to carefully analyze these changes to understand the company's motives and where it is headed in the future. Simply assuming that these changes indicate incompetence or increased risk of default would be a mistake without further analysis.

Changes in a Company's Capital Expenditures or Fixed Asset Sales