Which type of project is most likely to result in an increase in a company's net sales?

• A. Implementing stricter credit policies to reduce accounts receivable
• B. Reducing administrative expenses through cost-cutting measures
• C. Launching a new product line that targets a growing market segment
• D. Reclassifying existing liabilities as equity

Answer: (C)

Verified step by step guidance

1. Understand the concept of net sales: Net sales represent the revenue generated from selling goods or services, minus returns, allowances, and discounts. Projects that directly impact revenue generation are most likely to increase net sales.
2. Analyze the options provided: Evaluate each option to determine its potential impact on net sales. For example, stricter credit policies may reduce accounts receivable but do not directly increase sales revenue.
3. Consider the impact of launching a new product line: Introducing a new product line targeting a growing market segment can attract new customers and increase sales revenue, which directly contributes to higher net sales.
4. Evaluate the other options: Reducing administrative expenses through cost-cutting measures improves profitability but does not directly increase sales revenue. Reclassifying liabilities as equity is a financial restructuring activity and does not impact sales revenue.
5. Conclude that launching a new product line targeting a growing market segment is the most likely project to result in an increase in net sales, as it directly focuses on generating additional revenue.