When the Profitability Index Is Greater Than 1

question 107

True/False

When the profitability index is greater than 1.00 for a project, that project has a positive net present value.

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Definitions:

Revenues

Revenues are the total amount of money generated by a company from its business activities, like sales of goods and services, before any costs or expenses are deducted.

Costs Incurred

Expenses that a company has recognized or recorded, reflecting amounts spent on operations, projects, or activities.

Transfer of Accounts Receivable

The process of selling or assigning the right to collect on outstanding invoices to another party.

Transferee

An individual or entity that receives the transfer of assets, rights, or interests from another party.