Return on Investment Cannot Be Used Effectively to Evaluate Profit

question 89

True/False

Return on investment cannot be used effectively to evaluate profit centers because it motivates managers to make suboptimal decisions from the viewpoint of the organizations' owners.

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Definitions:

Incentive-based Regulations

Regulatory methods designed to encourage businesses to improve their environmental performance through rewards or penalties.

Political Suicide

Actions or decisions by a politician that are likely to seriously harm their own career or reputation.

Gasoline Consumption

This term measures the amount of gasoline used by vehicles within a certain area or by a country over a specified time period.

Federal Gasoline Tax

A tax imposed by the federal government on the sale of gasoline, primarily used to fund highway and mass transit projects.