Suppose you are conducting a financial analysis of a potential acquisition target,and you have been asked to identify the firm's engine of growth.Upon which of the following would you focus your analysis?

Question

Quizplus · Accepted Answer

The engine of growth refers to the key driver of a firm's future growth. Capital expenditures (CapEx) are investments made by a company to acquire, upgrade or maintain physical assets such as property, buildings, equipment, or technology. CapEx is a good indicator of a firm's investment in its future growth potential. A high level of CapEx implies that the company is expanding its operations, developing new products or services, or upgrading its technology. Therefore, focusing on the capital expenditures of the potential acquisition target would help identify its engine of growth.

Suppose You Are Conducting a Financial Analysis of a Potential