Chabot Company Had the Following Results Last Year: Net Operating

question 97

Multiple Choice

Chabot Company had the following results last year: net operating income, $2,160; turnover, 5; and ROI 18%. Chabot Company's average operating assets were:

• A)$300,000
• B)$60,000
• C)$10,800
• D)$12,000

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Definitions:

Capital Rationing

A strategy or situation where a company limits its new investments or projects due to constraints in available capital.

NPV

Net Present Value; a calculation used to estimate the value of an investment, considering the present value of its future cash flows.

Option To Wait

The choice to delay an investment or decision, which might carry value by allowing more information to be gathered, potentially leading to a better informed decision.

Discounted Cash Flow

A valuation method used to estimate the value of an investment based on its expected future cash flows, adjusted for the time value of money.