Which of the Following Best Describes the Profitability Index

question 133

Multiple Choice

Which of the following best describes the profitability index?

• A) an index of projects based on their net income
• B) the ratio of present value of net cash inflows to initial investment
• C) the ratio of total cash inflows to initial investment
• D) an array of possible investment outcomes at different discount rates

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Definitions:

Return On Investment

An indicator used to assess the gain or loss generated from an investment relative to its cost.

Delivery Cycle Time

The period from when a customer order is received to when the finished product is shipped.

Throughput Time

Throughput Time is the total time taken to produce a product, from the start of production to its completion.

Manufacturing Cycle Efficiency

A measure of the efficiency of the production process, calculated as the ratio of value-added time to total cycle time.