Financial Decision Making: A Case Study of Costco Wholesale
Added on -2019-09-22
This article discusses the financial decision-making process involved in the closure of capital expenses on plant property and equipment by the department manager of Costco Wholesale. It covers project analysis, capital expenditure budget, sound financial assumptions, project implementation, non-financial impact, authorization limits, and post-implementation review.
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Financial TaskFINANCIAL DECISION MAKING1
Financial TaskTask 1Introduction This capital expenditure is to propose the closure of capital expenses on plant property andequipment by department manager of Costco Wholesale. The project was replacing old plant andequipment. The purchase in replacement of sought the views of business. The major projectincluded capital expenditure on the warehouse's facility. Costco has expanded in its business todo low prices. The fixed cost for purchase the equipment written in the proposal with thefinancial investment described with the planned expense of the project. The company replacedthe equipment to keep pace.The capital investment decision in Costco Whole Sale involved these procedures leading tothe financial decision are as follows:a)Project analysis-Objectives of the project are to replaces its equipment when it wears out. Costco can bedescribed as the selection of high-quality products that get sold in bulk-sized in warehouses. Thebusiness part focused on selling merchandise at a low price. The single-step distribution policythat permits the company to sell its stock prior it gets paid to suppliers. The warehouserepresented the greater capacity permits the company to sell its stocks quickly.b)Capital expenditure budget-Capital expenditure budget for the Costco Wholesale has done for the acquisition of physicalassets. The Costco wholesale cash flow for capital expenditure has ended on an annual basis ontrailing twelve months of 2018 that is $ -3045 million. The expenses have done to purchaseproperty, plant and equipment costing quarterly basis in May 2019 as $ -672 million. They spent$ -3045 million in total over PPE.2
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