The Profitability Index Is Also Known as

question 101

Multiple Choice

The profitability index is also known as

• A)future value index.
• B)residual value index.
• C)investment index.
• D)present value index.

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Definitions:

Common Shares

Equity securities representing ownership in a company, giving holders voting rights and a share in the company's profits via dividends.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and adjusted for the investor’s share of the investee’s profit or loss.

Cost Method

An accounting method used to value an investment, wherein the investment is recorded at its acquisition cost without recognizing periodic income but dividends received are recorded as income.

NCI

An interest in a subsidiary not held by the controlling parent, representing a share of the subsidiary’s equity and profits or losses not owned by the parent company.