The Profitability Index Is the Ratio of the

question 23

Multiple Choice

The profitability index is the ratio of the

• A)future value of cash flows to investment.
• B)net present value of cash flows to investment.
• C)net present value of cash flows to IRR.
• D)present value of cash flows to IRR.

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Definitions:

Current Assets

Resources anticipated to be transformed into cash, sold off, or used up either within a year or over the span of the business's regular operational cycle, depending on which is more extended.

Current Liabilities

Short-term financial obligations that a company is expected to pay within one year.

Reasonably Possible

A term used in accounting and legal contexts to describe outcomes that are more than remote but less than likely.

Liability Likelihood

The probability or likelihood that a company will be responsible for an obligation or debt in the future.