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

Portfolio management a financial tool for a firm''net worth, I need your...

I need your assistance on how to group the relevant data so as to help me in the data analysis

Cost of capital, what is the cost of capital and advantages of it?

what is the cost of capital and advantages of it?

364-day t-bills, 364-Day T-Bills The Government considered that it is i...

364-Day T-Bills The Government considered that it is important to develop government securities market for monetary control. It also had an intention to ensure that government'

Does high operating leverage always mean high business risk, Does high oper...

Does high operating leverage always mean high business risk?  Explain. High operating leverage does not all the time mean high business risk.  If the companies sales are quite

Calculate profitability index, XYZ Ltd is a manufacturer and distributor of...

XYZ Ltd is a manufacturer and distributor of agricultural equipment. XYZ produces milking machines and supplies as well as being the sole Australian distributor of machinery from t

Cost of capital, COST OF CAPITAL A project's Cost of Capital is the sm...

COST OF CAPITAL A project's Cost of Capital is the smallest amount of acceptable rate of return/required rate of return on funds committed to the project. It is a compensation

Role of special purpose vehicle, The financial institutions tha...

The financial institutions that originate the loans sell a pool of cashflow-producing assets to a specially created third party that is called a

Explain difference among the discounted free cash flow model, Explain the d...

Explain the difference among the discounted free cash flow model as it is applied to the valuation of common equity and as it is applied to the valuation of whole businesses. The

What is diversification, Diversification A  strategy  which tends to mo...

Diversification A  strategy  which tends to move  into  new  products  and  new  markets  in  which  organisation is unfamiliar with. Related for example vertical forwar

Determine finance growth and evolution, a) Debentures are a source of exter...

a) Debentures are a source of external long term (loan) finance for which interest is paid to the debenture holder. Debenture holders do not usually have voting or ownership rights

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