Managers May Use the Accounting Rate of Return to Evaluate

question 146

Multiple Choice

Managers may use the accounting rate of return to evaluate potential investment projects because

• A) debt contracts require that a firm maintain certain ratios that are affected by income and long-term asset levels.
• B) it serves as a screening measure to insure that new investments do not affect key financial ratios.
• C) bonuses to managers may be based on accounting income and/or return on assets.
• D) it can be tied to the manager's personal income.
• E) All of these.

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The act of digging up or removing earth to uncover and discover something buried.

Mammoth

A large, extinct species of the elephant, known for its long curved tusks and considerable size, that lived during the Pleistocene epoch.

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A person who pursues and kills wild animals for food or sport.

Extinct Species

Species that no longer exist anywhere on Earth, often due to natural causes or human activities.