Amazon
Avaya
Cisco
CompTIA
CrowdStrike
EC-Council
EXIN
Fortinet
Google
ISC
ISC2
ITIL
Juniper
Microsoft
NVIDIA
Okta
Palo Alto Networks
Salesforce
SAP
ServiceNow
All Vendors
  1. Home
  2. Financial
  3. CMA

Financial CMA Exam (page: 48)
Financial Certified Management Accountant
Updated on: 17-Feb-2026

Viewing Page 48 of 270
CMA PDF 1336 Questions

Details: Ranking Investment Projects 19

The profitability index approach to investment analysis

  1. Fails to consider the timing of project cash flows.
  2. Considers only the project's contribution to net income and does not consider cash flow effects.
  3. Always yields the same accept/reject decisions for independent projects as the net present value method.
  4. Always yields the same accept/reject decisions for mutually exclusive projects as the net present value method.

Answer(s): C

Explanation:

The profitability index is the ratio of the present value of future net cash inflows to the initial net cash investment. It is a variation of the net present value (NPV) method and facilitates the comparison of different-sized investments. Because it is based on the NPV method, the profitability index will yield the same decision as the NPV for independent projects. However, decisions may differ for mutually exclusive projects of different sizes.




Details: Ranking Investment Projects 19

If an investment project has a profitability index of 1.15,the

  1. Project's internal rate of return is 15%.
  2. Project's cost of capital is greater than its internal rate of return.
  3. Project's internal rate of return exceeds its net present value.
  4. Net present value of the project is positive.

Answer(s): D

Explanation:

The profitability index is the ratio of the present value of future net cash inflows to the initial net cash investment. It is a variation of the NPV method that facilitates comparison of different-sized investments. A profitability index greater than 1.0 indicates a profitable investment or one that has a positive net present value.




Details: Ranking Investment Projects 19

The technique used to evaluate all possible capital projects of different dollar amounts and then rank them according to their desirability is the

  1. Profitability index method.
  2. Net present value method.
  3. Payback method.
  4. Discounted cash flow method.

Answer(s): A

Explanation:

The profitability index is the ratio of the present value of future net cash inflows to the initial cash investment; that is, the figures are those used to calculate the net present value (NPV), but the numbers are divided rather than subtracted. This variation of the NPV method facilitates comparison of different-sized investments. It provides an optimal ranking in the absence of capital rationing.




Details: Ranking Investment Projects 19

The profitability index (present value index)

  1. Represents the ratio of the discounted net cash outflows to cash inflows.
  2. Is the relationship between the net discounted cash inflows less the discounted cash outflows divided by the discounted cash outflows.
  3. Is calculated by dividing the discounted profits by the cash outflows.
  4. Is the ratio of the discounted net cash inflows to discounted cash outflows.

Answer(s): D

Explanation:

The profitability index, also known as the excess present value index, is the ratio of the present value of future net cash inflows to the initial net cash investment (discounted cash outflows). This tool is a variation of the NPV method that facilitates comparison of different-sized investments.




Details: Ranking Investment Projects 19

The method that divides a project's annual after--tax net income by the average investment cost to measure the estimated performance of a capital investment is the

  1. Internal rate of return method.
  2. Accounting rate of return method.
  3. Payback method.
  4. Net present value (NPV) method.

Answer(s): B

Explanation:

The accounting rate of return uses undiscounted net income (not cash flows) to determine a rate of profitability. Annual after-tax net income is divided by the average carrying amount (or the initial value) of the investment in assets.



Viewing Page 48 of 270



Share your comments for Financial CMA exam with other users:

Tai 8/28/2023 5:28:00 AM

wonderful material
SOUTH AFRICA


VoiceofMidnight 12/29/2023 4:48:00 PM

i passed!! ...but barely! got 728, but needed 720 to pass. the exam hit me with labs right out of the gate! then it went to multiple choice. protip: study the labs!
UNITED STATES


A K 8/3/2023 11:56:00 AM

correct answer for question 92 is c -aws shield
Anonymous


Nitin Mindhe 11/27/2023 6:12:00 AM

great !! it is really good
IRELAND


BailleyOne 11/22/2023 1:45:00 AM

explanations for the answers are to the point.
Anonymous


patel 10/25/2023 8:17:00 AM

how can rea next
INDIA


MortonG 10/19/2023 6:32:00 PM

question: 128 d is the wrong answer...should be c
EUROPEAN UNION


Jayant 11/2/2023 3:15:00 AM

thanks for az 700 dumps
Anonymous


Bipul Mishra 12/14/2023 7:12:00 AM

thank you for this tableau dumps . it will helpfull for tableau certification
UNITED STATES


hello 10/31/2023 12:07:00 PM

good content
Anonymous


Matheus 9/3/2023 2:14:00 PM

just testing if the comments are real
UNITED STATES


yenvti2@gmail.com 8/12/2023 7:56:00 PM

very helpful for exam preparation
Anonymous


Miguel 10/5/2023 12:16:00 PM

question 11: https://help.salesforce.com/s/articleview?id=sf.admin_lead_to_patient_setup_overview.htm&type=5
SPAIN


Noushin 11/28/2023 4:52:00 PM

i think the answer to question 42 is b not c
CANADA


susan sandivore 8/28/2023 1:00:00 AM

thanks for the dump
Anonymous


Aderonke 10/31/2023 12:51:00 AM

fantastic assessments
Anonymous


Priscila 7/22/2022 9:59:00 AM

i find the xengine test engine simulator to be more fun than reading from pdf.
GERMANY


suresh 12/16/2023 10:54:00 PM

nice document
Anonymous


Wali 6/4/2023 10:07:00 PM

thank you for making the questions and answers intractive and selectable.
UNITED STATES


Nawaz 7/18/2023 1:10:00 AM

answers are correct?
UNITED STATES


das 6/23/2023 7:57:00 AM

can i belive this dump
INDIA


Sanjay 10/15/2023 1:34:00 PM

great site to practice for sitecore exam
INDIA


jaya 12/17/2023 8:36:00 AM

good for students
UNITED STATES


Bsmaind 8/20/2023 9:23:00 AM

nice practice dumps
Anonymous


kumar 11/15/2023 11:24:00 AM

nokia 4a0-114 dumps
Anonymous


Vetri 10/3/2023 12:59:00 AM

great content and wonderful to have the answers with explanation
UNITED STATES


Ranjith 8/21/2023 3:39:00 PM

for question #118, the answer is option c. the screen shot is showing the drop down, but the answer is marked incorrectly please update . thanks for sharing such nice questions.
Anonymous


Eduardo Ramírez 12/11/2023 9:55:00 PM

the correct answer for the question 29 is d.
Anonymous


Dass 11/2/2023 7:43:00 AM

question no 22: correct answers: bc, 1 per session 1 per page 1 per component always
UNITED STATES


Reddy 12/14/2023 2:42:00 AM

these are pretty useful
Anonymous


Daisy Delgado 1/9/2023 1:05:00 PM

awesome
UNITED STATES


Atif 6/13/2023 4:09:00 AM

yes please upload
UNITED STATES


Xunil 6/12/2023 3:04:00 PM

great job whoever put this together, for the greater good! thanks!
Anonymous


Lakshmi 10/2/2023 5:26:00 AM

just started to view all questions for the exam
NETHERLANDS