Journal of Legal, Ethical and Regulatory Issues (Print ISSN: 1544-0036; Online ISSN: 1544-0044)


Profitability Index and Its Impact on Short and Long Term Decisions

Author(s): Naji Shayeb Al-Rikabi

The profitability index plays an important role in helping decision making, whether they are short-term decisions under differential analysis or long-term decisions. The profitability index is used in various ways to help short-term decision making, especially when economic resources are scarce, and it also requires determining the production lines that remain in Work and those production lines that are discontinued based on their profitability. The profitability index is also used in pricing products and in granting incentives to salesmen. Also, the profitability index is used to compare between long-term investment projects that have positive net present value or it has economically feasible, this requires selecting some of them.

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