When Comparing Two Different Investment Alternatives of Different Sizes, Which

question 16

Multiple Choice

When comparing two different investment alternatives of different sizes, which of the following measures for each alternative would be the best to use?

• A) Return on investment
• B) Residual income
• C) Net income
• D) Contribution margin ratio

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Definitions:

Cash Collections

The process of receiving and managing payments from customers for goods or services provided.

Accounts Receivable

Money owed to a company by its customers for goods or services delivered but not yet paid for.

Zero-Based Budgeting

A budgeting method where all expenses must be justified for each new period, starting from a "zero base," rather than just adjusting previous budgets.

Cash Budget

An estimate of cash inflows and outflows over a specific period, used to manage and plan for cash needs.