What is qualities of pay back method, Financial Management

Assignment Help:

Q. What is Qualities of Pay Back Method?

Qualities of Pay Back Method:-

(i) Simple: - The most important merit of this method is that it is simple to understand and easy to compute.

(ii) Suitable for Firms Suffering from Liquidity: - This method is very suitable for firms suffering from shortage of cash for the reason that emphasis in this method is on quick recovery of the original investment.

(iii)Appropriate in case of Uncertain Conditions: - This method is very appropriate where the long term outlook is extremely uncertain and risky.

(iv) Importance to Short-Term Earnings: - This method is useful for firms which lay more emphasis on short-term earnings rather than the long-term growth.

(v) Superior to ARR Method: - It is superior to ARR method for the reason that it is based on cash flow analysis.


Related Discussions:- What is qualities of pay back method

Capital budgeting case study, RWE Enterprises is a small manufacturer in Ad...

RWE Enterprises is a small manufacturer in Adelaide South Australia, feed suppliments for cattle. New production line NPV, Payback period and discounted payback period

State about the audit plan contents, State about the Audit plan contents ...

State about the Audit plan contents 1. Report requirements and terms of reference. 2. A review of business and financial position, reviewing why changes had occurred in curr

Explain the average rate of return method, Q. Explain the Average Rate of r...

Q. Explain the Average Rate of return Method? Average Rate of return Method (ARR): This method is as well known as Accounting Rate of Return Method. It is on the basis of accou

Mortgages, A mortgage may be defined as a pledge of property ...

A mortgage may be defined as a pledge of property to secure a debt payment; in this context, we will use the term property to mean real estate. If the

Engagement completion document, Engagement Completion Document - A document...

Engagement Completion Document - A document whereby AUDITOR identifies all significant findings or issues. Document must be as specific as essential in the circumstances for a revi

Public financial statements of a company, Public Financial Statements of a ...

Public Financial Statements of a Company The final exercise is the valuation of a publicly held company's equity. You must base your valuation on the company's public financia

What is the required rate of return on the project, The risk free rate is 1...

The risk free rate is 10 percent and the expected return on the market portfolio is 14 percent. A firm considers a project that is expected to have a beta of 1.3, whereas the beta

How do we calculate the payback period, How do we calculate the payback per...

How do we calculate the payback period for a proposed capital budgeting project? What are the major criticisms of the payback method? We compute the payback period for a proposed

Working capital, W orking Capital Working capital is measured as th...

W orking Capital Working capital is measured as the difference among organization present assets and its current liabilities. Therefore, it is interpreted by some as a meas

Evaluate cost of preference share capital, Q. Evaluate Cost of Preference S...

Q. Evaluate Cost of Preference Share Capital? Cost of Preference Share Capital: - A fixed rate of dividend is to be paid on preference shares. However unlike debt the dividend

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd