List and explain three ways that AIS affects the income statement and the firm's profitability.
What will be an ideal response?
Answers will vary but could include some of these items.
| Income Statement | Effect of AIS on Income Statement |
| Revenues | Customer Relationship Management techniques could attract new customers, generating additional sales revenue. |
| Less: Cost of Goods Sold | Supply Chain Management Software allows firms to carry the right inventory and have it in the right place at the right time. This, in turn, will lower obsolescence as well as logistics and procurement costs. |
| Gross Margin | ? |
| Less: Selling, General and Administrative Expenses (SG&A) | An efficient Enterprise System can significantly lower the cost of support processes included in sales, general, and administrative expenses. ? |
| Less: Interest Expense | Supply Chain Management Software allows the firm to carry less inventory. The less inventory the firm has to carry leaves less assets to finance, and may possibly reduce debt and its related interest. ? |
| Net Income | All combined, a well-designed and well-functioning AIS with investments in Enterprise Systems, Supply Chain Management and/or Customer Relationship Management can be expected to improve net income |
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