Which of the Following Statement(s)is/are True? (A)If a Division's Return

question 53

Multiple Choice

Which of the following statement(s) is/are true? (A) If a division's return on investment (ROI) exceeds its cost of capital,then its residual income is positive.
(B) If a division's cost of capital equals its return on investment (ROI) ,then its residual income is zero.

• A)only (A)is true
• B)only (B)is true
• C)both (A)and (B)are true
• D)neither (A)and (B)is true

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Definitions:

Credit Policy

Guidelines that a company follows to determine the creditworthiness of customers, the terms of credit to offer, and how to collect payments.

Accounts Receivable

Money owed to a company by its debtors for goods or services delivered but not yet paid for.

Credit Standards

The financial strength and creditworthiness that qualifies a customer for a firm’s regular credit terms.

Financial Importance

Financial importance refers to the significance placed on managing finances effectively to ensure stability and growth of an individual's or organization's assets.