The Performance Measure That Uses After-Tax Operating Income and the Actual

question 98

Multiple Choice

The performance measure that uses after-tax operating income and the actual cost of capital employed is

• A) return on investment (ROI).
• B) residual income.
• C) economic value added (EVA).
• D) margin.
• E) turnover.

---

Definitions:

Stockholders' Equity

The residual interest in the assets of a corporation after subtracting liabilities, representing the ownership stake of shareholders.

Investment Account

An account held at a financial institution that holds securities, cash, and other investments, used for the purpose of long-term or short-term investing.

Carrying Value

The amount at which an asset is recognized on the balance sheet after deducting accumulated depreciation and impairment losses.

Inventory

Goods and materials that a business holds for the ultimate goal of resale.