Which of the Following Is TRUE Regarding the Profitability Index

question 93

Multiple Choice

Which of the following is TRUE regarding the profitability index?

• A)It does not use the net present value (NPV)to assess benefits.
• B)It is very simple to compute.
• C)Attention must be taken when using it to make sure that all of the constrained resource is utilized.
• D)It is unreliable when used for choosing between different projects.
• E)It ignores cash flows after the cutoff

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Definitions:

Assumed Liability

Liability that a party takes on voluntarily from another party, often seen in business acquisitions where the buyer takes on liabilities of the seller.

Creditors

Individuals or entities to whom money is owed by a debtor.

Promotional Campaign

A coordinated series of marketing messages and activities aimed at generating awareness or stimulating demand for a product or service.

Competitors' Strengths

The unique advantages or positive attributes that competitors possess, which can include superior technology, market position, or customer service.