Financial Performance Measures Are Useful in Reducing Waste and Inefficiencies

question 125

True/False

Financial performance measures are useful in reducing waste and inefficiencies in operating activities.

---

Definitions:

Profitability Index

A financial tool that calculates the ratio of the present value of future expected cash flows to the initial investment cost.

Working Capital

A disparity between a firm's current holdings and its outstanding obligations, signifying its short-term economic fitness and effectiveness in functioning.

Discount Rate

In the context of discounted cash flow analysis, this is the interest rate used to establish the present-day value of future cash inflows.

Net Operating Cash Inflows

This represents the cash that a business generates from its ordinary, operational activities, excluding financing or investment cash flows.