If a Manager Is Evaluated Using the Return on Investment

question 88

Multiple Choice

If a manager is evaluated using the return on investment, the manager may be reluctant to invest in new equipment because the additional investment

• A)may reduce profit by the cost of the investment.
• B)will decrease the level of assets.
• C)may decrease the return on investment.
• D)may increase investment turnover.

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Definitions:

Financial Statements

Formal records of the financial activities and position of a business, individual, or other entity, including the balance sheet, income statement, and statement of cash flows.

Operating Activities

The portion of a company's business activities that are related to its main operations, such as selling products or offering services.

Cash Flow Statement

A report detailing the impact of variations in balance sheet figures and income on cash and cash equivalents, segmented into operations, investments, and finance-related actions.

Dividend Payments

Dividend payments are the distribution of a portion of a company's earnings, decided by the board of directors, to its shareholders.