Which of the Following Statements Is FALSE

question 72

Multiple Choice

Which of the following statements is FALSE?

• A)The profitability index measures the value created in terms of NPV per unit of resource consumed.
• B)The profitability index is the ratio of value created to resources consumed.
• C)The profitability index can be easily adapted for determining the correct investment decisions when multiple resource constraints exist.
• D)The profitability index measures the "bang for your buck."

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Definitions:

Income Statement

A financial report showing the company’s revenues, expenses, and profits over a specific period of time.

Administrative Expense

Costs related to the general operation of a business that are not directly tied to producing goods or services, such as salaries of office staff and utilities.

Other Expense

Expenses that cannot be traced directly to operations.

Unusual Item

An uncommon or rare event that affects a company's financial statements, not expected to recur frequently.