Which is NOT the method for determining the company profit goal? A) Return-on-investment method B) Stipulated...

Which is NOT the method for determining the company profit goal?

A)	Return-on-investment method

B)	Stipulated sum method

C)	Profit-to-earnings ratio

D)	Cost-Volume-Profit method

Expert Solution

In the Given question we are required to answer which amongst the following is not a method for determining the the company profit goal

Answer : Stipulated sum method is NOT the method for determining the company profit goal

Explanation : Stipulated sum method is a Type of method where in a specific amount is set forth as the total payment to be made on completion of the agreement / contract. It the manner in which a consideration payable will be paid on the Contracts. Hence is not a method for determining the the company profit goal, but mere payment method.

While as,

Return on investment, is also known as profitability ratio. Under this method it takes into consideration the money the company invests in the projects and the return it realizes on that money based on the net profit of the business.

the cost volume profit analysis, is also known as CVP, it is a process of planning used by management to predict the future volume of activity of the Company , costs incurred, sales made, and profits received.This method is used to predict the impact of the changes in these parameters on profits of the Company.

Profit-to-earnings ratio : Under Profit to earnings ratio, it measures its profits allocated relative to its per-share earning. This ratio is also helpful in determining the company profit goal.

ekkarill92 answered 1 year ago

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