Using the profitability index,it is easy to decide which product is less profitable and should be de-emphasized.

Question

Quizplus · Accepted Answer

The profitability index measures the present value of future cash flows divided by the initial investment. It is a useful tool to evaluate investment projects and prioritize them based on their relative profitability. By comparing the profitability indices of different products or projects, we can identify which ones are more lucrative and should be prioritized, and which ones are less profitable and should be de-emphasized or abandoned. Therefore, the statement is true.

Using the Profitability Index,it Is Easy to Decide Which Product