Using the Profitability Index, Which of the Following Projects Would

question 284

Multiple Choice

Using the profitability index, which of the following projects would you choose if you have limited funds?

• A) Project 1
• B) Project 2
• C) Project 3
• D) Project 4
• E) Project 5

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Definitions:

Debt Ratio

A financial ratio that measures the extent of a company’s leverage, calculated by dividing total liabilities by total assets.

Total Debt

The sum of all liabilities, both short and long term, that a company owes.

Cash In Hand

The amount of liquid money or physical currency that a company or individual has readily available.

Bills Receivable

Financial documents representing money owed to a business by its customers that is payable within a short period.