Benefits-Drawbacks

Advantages Of Profitability Index (PI) Main benefits or advantages of using profitability index method of evaluating investments can be explained as follows: 1. Widely Used Technique Profitability Index (PI) is very easy to calculate. So, it is common and widely used technique to evaluate different investment proposals. 2....

Advantages Of Net Present Value (NPV) Main benefits or advantages of NPV method of selecting most profitable capital project can be expressed as follows: 1. Time Value Of Money One of the major benefits of using NPV method is that it considers time value of money. Future estimated cashflows are converted into present...

Advantages Of Accounting Rate Of Return (ARR) Main benefits or advantages of accounting rate of return method of evaluating investment proposals can be studied as follows: 1. Simple Method Accounting rate of return (ARR) is simple and widely used technique of comparing capital projects which can be understood easily...

Advantages Of Payback Period (PBP)  Main benefits or advantages of payback period method of evaluating investment proposal are as follows: 1. Simplicity Payback period method is very simple to understand. It does not require specific knowledge and accounting rules to apply. So, it is universally applied method of...

Major limitations or disadvantages of ratio analysis can be studied as follows: 1. Based On Past Information Ratio analysis is based on the financial statements which provide historical financial data and information. So, it may not be helpful in predicting the future of the business. 2. Ignores Qualitative Factors Ratio...

Main benefits or advantages of ratio analysis can be studied as follows: 1. Financial Position Analysis Ratio analysis reveals the financial position of the company by analyzing financial statements. It explores the financial health of the business during a particular period. 2. Simplifying Figures Ratio analysis...