The Major Limitation of Cost Effective Analysis as Compared with Cost

question 12

Multiple Choice

The major limitation of cost effective analysis as compared with cost benefit analysis is that:

• A)cost effective analysis cannot determine which of several programs is the most efficient.
• B)cost effective analysis is far more complex and difficult to apply.
• C)cost effective analysis is only good for determining which of several programs is most efficient.
• D)cost effective analysis consistently underestimates costs.

---

Definitions:

Balance Sheet

A financial statement that provides an overview of a company's assets, liabilities, and shareholders' equity at a specific point in time.

Income Statement

A financial document that shows a company's revenues and expenses over a specific period, illustrating profitability.

Working Capital Ratio

The amount of current assets that would remain if all a company’s current liabilities were paid immediately; total current assets / total current liabilities.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time.