Normative Decision Theory Recognizes That Managers Have Only Limited Time

question 69

True/False

Normative decision theory recognizes that managers have only limited time and cognitive ability and therefore their decisions are characterized by bounded rationality.

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Definitions:

Net Profit Margin

A financial ratio that shows the percentage of net income generated from total revenue.

Gross Margin

The difference between sales revenue and the cost of goods sold, representing the profitability before deducting operating expenses.

Return On Total Assets

A financial ratio that measures the net income produced by total assets during a period by comparing net income to the average total assets.

Return On Equity

A measure of financial performance calculated by dividing net income by shareholders' equity, indicating how well a company uses investments to generate earnings growth.