Residual Income Is a Performance Evaluation That Is Used in Conjunction

question 50

Multiple Choice

Residual income is a performance evaluation that is used in conjunction with,or instead of,return on investment (ROI) .In many cases,residual income is preferred to ROI because (CIA adapted)

• A)Residual income is a measure over time,while ROI represents the results for one period.
• B)Residual income concentrates on maximizing absolute dollars of income rather than a percentage return as with ROI.
• C)The imputed interest rate used in calculating residual income is more easily derived than the target rate that is compared to the calculated ROI.
• D)Average investment is employed with residual income while year-end investment is employed with ROI.

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Definitions:

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A facility where raw materials are processed, refined, or transformed into finished products through various mechanical or chemical procedures.

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An aggregated score that combines several individual scores or measures to form a single summary statistic.