The Theory of Constraints Uses ______ Performance Measures to Evaluate

question 1

Multiple Choice

The theory of constraints uses ______ performance measures to evaluate whether the effectiveness of the improvements made has enabled the system to make more money.

• A)two
• B)three
• C)four
• D)five

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Definitions:

Retention Ratio

The proportion of net income that is retained by a company rather than distributed to its shareholders as dividends.

Payout Ratio

The proportion of earnings a company pays to its shareholders in the form of dividends, expressed as a percentage of the company's total earnings.

Net Income

The profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.

Internal Growth Rate

The maximum growth rate a firm can achieve without resorting to external financing.