Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
Which of the following statements is true regarding the profitability index? (See your Chapter 25 notes, pages 9 & 13)
Only proposals with profitability indexes greater than or equal to 1.00 should be considered.
Only proposals with profitability indexes greater than or equal to 0.00 should be considered.
Only proposals with profitability indexes less than 0.00 should be considered.
Only proposals with profitability indexes less than 1.00 should be considered.
Only proposals with profitability indexes greater than or equal to 10.00 should be considered.
Only proposals with profitability indexes less than 10.00 should be considered.
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