A Major Criticism of the Payback Method Is That It

question 88

True/False

A major criticism of the payback method is that it focuses only on the time to recover the investment and ignores profitability.

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Definitions:

Liquidity

The ease with which an asset can be converted into cash without affecting its market price.

Profitability

Refers to a company's ability to generate income relative to its revenue, operating costs, and other expenses over a certain period.

Solvency

The ability of a business to meet its long-term debts and financial obligations.

Liquidity Ratio

A financial metric used to determine a company's ability to pay off its short-term liabilities with its available liquid assets.