alleryStart learning →The profitability index is best described as the ratio of what to what?
ASales to fixed assets
BDebt to total equity
CProfit to total sales
DPayoff to investment
Answer & Solution
Correct answer: D. Payoff to investment
PI compares the value a project pays off with the money put in, giving value created per rupee invested.
Keep practising Profitability Index
Browse all Profitability Index questions for CA Inter, or explore more Financial Management topics.
Related questions
Which rule applies to a PI result of 1.092 for an independent project?Perpetual inflow of Rs 12,000 a year at 10 percent against an outlay of Rs 1,00,000 gives Which of these is a technique that ignores the time value of money?A project has NPV zero at 18 percent discount rate. What is its IRR?If IRR exceeds the cost of capital on a conventional project, what is NPV?Which discount rate is often used when discounting project cash flows in NPV?Why is NPV on after-interest cash flows wrong?What is a limitation of the NPV approach regarding non-financial matters?