Analysis Using the Profitability Index

question 26

Multiple Choice

Analysis using the profitability index:

• A) frequently conflicts with the accept and reject decisions generated by the application of the net present value rule.
• B) is useful as a decision tool when investment funds are limited.
• C) cannot be used to aid capital rationing.
• D) utilizes the same basic variables as those used in the average accounting return.
• E) produces results which typically are difficult to comprehend or apply.

---

Definitions:

H-form Design

A type of organizational structure characterized by a multidivisional model, with each division operating as a separate business or profit center.

Organizational Design

The process of shaping an organization's structure and roles to align with its objectives and strategies.

Closely Related

Describes entities or concepts that have a strong connection or association with each other.

Divisional Design

refers to an organizational structure where operations are segregated based on product lines, markets, or geographic regions, allowing for more focused management and resources allocation.