Which of the following is true of profitability?
A)Profit is a long-term measure which cannot be manipulated.
B)Profits are not affected by factors such as weather.
C)Analysts should use indirect costing to determine the profitability of a product or market segment.
D)A managerial obsession with profitability can prove counterproductive.

Question

Quizplus · Accepted Answer

A managerial obsession with profitability can lead to a focus solely on short-term gains at the expense of long-term growth and sustainability. It can also lead to unethical behavior and manipulation of financial statements. Thus, a balanced approach that considers both profitability and other factors such as ethical standards and long-term growth is essential. Choices A, B, and C are incorrect as profit can be manipulated, profits can be affected by external factors such as weather, and direct costing may be more appropriate for determining profitability in certain situations.

Which of the Following Is True of Profitability