The profitability index is most useful When the NPV method and the IRR method give conflicting signals. When capital needs to be rationed. When the cash flow pattern is unusual. None of the above.

Q: Which of the following is not a correct statement O a. Profit maximization is vague conceptually.…

A: The profit maximization concept explains that the company should undertake such actions, investments…

Q: The two main approaches to equity analysis are the relative valuation models and…

A: Equity valuation is used by analysts to evaluate or analyze a company or a group of companies by…

Q: The accrual accounting rate-of-return method has a significant weakness for use in making capital…

A: The accrual accounting rate of return refers to the percentage of return that is ecpected form the…

Q: Assuming that we are not able to accurately predict cash flows , generally decreased risk is thought…

A: Cash flow at risk at risk tells us how changes in market factors can change the future cash flows.…

Q: Consider the following two projects: Year 0 Cash Flow - 100 - 73 Project A B 22.7 45.3 18.1 Year 1…

A: As per Bartleby honor code, when multiple questions are asked, the expert is required only to solve…

Q: Which of the following statements is false? (You may select more than one answer.)a. The total-cost…

A: Capital budgeting refers to the process by which long-term investment proposals are evaluated based…

Q: Why is the predictability of cash flow so important?

A: Cashflow is defined as the movement of cash into and outside the business in order to facilitate the…

Q: Which one of the following could be considered as an advantage of using the payback method of…

A: Solution: Payback period represents that period where the initial cost of the investment gets…

Q: Contrast the modern construct for FISIM with a measure that sub- tracts deposits from the financial…

A: Financial Intermediation Services Indirectly Measured (FISIM) In general, only a small part of…

Q: Financial planning models tends to focus too much on accounting relationships and ignores cash flow…

A: A financial planning model is used to create a future financial plan for the company.

Q: Can free cash flow continue to grow, even if ROIC falls? Explain.

A: If the working capital of the company can be managed free cash flow can grow at a better rate even…

Q: echnical problems associated with the internal rate of return include:

A: IRR (Internal Rate of Return): It is the rate of return that makes the net present value of the…

Q: One of the shortcoming of the payback method is that it ignores cash flows after the payback period.…

A: Payback method has serious disadvantages like it Ignores the time value of money.

Q: Question 2   Which one of the following methods of analysis could completely ignore some cash flows?…

A: Capital Budgeting involves various techniques which are used to evaluate different proposals to make…

Q: The payback rule is generally most useful when:

A: The payback period is the time taken to recover the money spent on the project. According to the…

Q: Consider the following statements concerning the payback method of investment appraisal. 1. It…

A: The payback method of investment appraisal is a simple technique that calculates the amount of time…

Q: When using EBITDA instead of net income to measure a firm's operational characteristics, why are…

A: EBITDA means earnings before interest, tax, depreciation and amortisation. It means all these have…

Q: predict

A: Financial planning is always a challenging task for nay company & the things become even more…

Q: Why is "Projecting Growth Beyond What the Capital Being Valued Will Support" considered a common…

A: Income Approach There are two different model which was incurred in the income approach.  The…

Q: Where do nothing was preferred what assumption is being made about the return generated by the…

A: When the phrase "where nothing was preferred" is mentioned, it implies that the return generated by…

Q: In the discounted cashflow method, the discount rate is used for the following reasons EXCEPT a. it…

A: Discounted Cashflow Method: The discounted cash flow (DCF) approach is a method of valuation that is…

Q: why discounted cash flow methods are preferred to the more traditional techniques of payback and…

A: The term "discounted cash flow" (DCF) designates a technique for valuing investments that determines…

Q: If either of the liquidity ratios is less than that of the industry as a whole, does that mean that…

A: Following are the liquidity ratios:

Q: Question1. Arbitrage is limited because the wealth of arbitrageurs is limited.  Discuss this…

A: 1. Arbitrage, the practice of exploiting price differences of identical or similar financial…

Q: Calculate the present value and future value of an uneven cash flow stream.

A: A stream of cash flow is uneven  when all the amounts in the series of cash flows are unequal .i.e.,…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.