Which of the following is NOT a capital budgeting technique?
Practice Questions
1 question
Q1
Which of the following is NOT a capital budgeting technique?
Net Present Value (NPV)
Internal Rate of Return (IRR)
Payback Period
Current Ratio
The Current Ratio is a liquidity measure, not a capital budgeting technique.
Questions & Step-by-step Solutions
1 item
Q
Q: Which of the following is NOT a capital budgeting technique?
Solution: The Current Ratio is a liquidity measure, not a capital budgeting technique.
Steps: 4
Step 1: Understand what capital budgeting techniques are. These are methods used to evaluate potential investments or projects, such as Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period.
Step 2: Identify the options given in the question. Look for terms that are related to capital budgeting techniques.
Step 3: Recognize that the Current Ratio is a financial metric that measures a company's ability to pay short-term obligations. It is not used to evaluate long-term investments.
Step 4: Conclude that since the Current Ratio is a liquidity measure, it does not belong to the category of capital budgeting techniques.
