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Which of the Following Is a Method of Analyzing Capital

question 101

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Which of the following is a method of analyzing capital investment proposals that ignores present value?


Definitions:

Variable Costs

Costs that change in proportion to the level of goods or services produced.

Contribution Margin Ratio

The percentage of each sales dollar that contributes to covering fixed costs and generating profit.

Pre-tax Income

The total earnings of a company before any taxes have been deducted, often considered when assessing the profitability of a company.

Contribution Margin

The contribution margin is the revenue from a product or service minus the variable cost, indicating how much contributes to covering fixed costs and generating profit.

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