An Advantage of ROI as a Measure of Performance Is

question 111

Multiple Choice

An advantage of ROI as a measure of performance is that

• A) it is sensitive to book value.
• B) it provides an incentive to use existing assets efficiently.
• C) the time span of concern is short range.
• D) the business cycle strongly affects ROI performance often despite managerial performance.
• E) it is very sensitive to depreciation policy.

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Definitions:

Cash Sales

Transactions where customers pay for goods or services in cash at the point of sale, resulting in immediate revenue.

Credit Sales

Sales made on credit, allowing customers to purchase goods or services and pay for them at a later date.

Loss from Sale

An unfavorable difference between the selling price of an asset and its book value, leading to a financial loss for the entity.

Assets

Resources owned or controlled by a business, expected to bring future economic benefits.