The Profitability Index Can Be Helpful When a Financial Manager

question 148

True/False

The profitability index can be helpful when a financial manager encounters a situation where capital rationing is required.

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Definitions:

Fourth Quintile

The subgroup that represents the fourth segment of a population divided into five equal groups based on a particular characteristic, typically income.

Total Income

The sum of all earnings or revenue generated by an individual or entity from various sources before any deductions.

U.S. Income Distribution

The way in which total income is shared among the population of the United States.

Crowding Model

A theory or model that explains how public sector involvement can displace or reduce private sector activity in certain markets.