Which Three of the Following Are Drawbacks to Using Accounting

question 2

Multiple Choice

Which three of the following are drawbacks to using accounting figures to judge managerial performance?

• A) Earnings per share growth can lead to loss of value if the time value of money is not accounted for.
• B) Figures for earnings per share are not used by institutional investors as a criterion for judging managerial performance.
• C) Earnings per share growth fails to take account of the investment needed to generate that growth.
• D) Focusing purely on the growth in earnings fails to take account of the risk of those earnings.

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