Which of the Following Is NOT True When Deciding on the "Share

question 28

Multiple Choice

Which of the following is NOT true when deciding on the "share" between the company and employees in a gain-sharing plan?

• A) When productivity gains are defined on a relatively small base, the split tends to be skewed towards employees.
• B) When companies use capital-intensive methods, the share tends to be lower.
• C) When the base line increases significantly, the share needs to be higher so as to compensate for the increased level of difficulty in attaining productivity gains.
• D) When productivity gains are defined on a relatively large base, the split tends to be skewed towards employees.

---

Definitions:

Expected Total Cash Flows

The projection of all the cash that is anticipated to be received or paid out over a certain period of time in the future.

Cash Payback Period

The time period required for the returns from an investment to repay the initial capital outlay.

Annual Net Cash Flows

This term refers to the amount of money that flows in and out of a business over a year after all expenses have been accounted for.

Expected Total Cash Flows

An estimation of all cash inflows and outflows associated with an investment over its expected life, used to gauge its profitability.