An Advantage of Using ROI to Evaluate Performance Is That

question 68

True/False

An advantage of using ROI to evaluate performance is that it encourages the manager to reduce the investment in operating assets as well as increase net operating income.

---

Definitions:

Schedule D

A form used with tax returns to report capital gains and losses from transactions of capital assets.

Trade or Business

An activity undertaken by a person or entity for the purpose of earning profit from selling goods or services.

Capital Assets

Long-term property owned for investment or personal purposes, including stocks, bonds, real estate, and equipment.

IRC

The Internal Revenue Code, which is the comprehensive set of tax laws created by the Internal Revenue Service in the United States.