A Limitation of ROI as a Measure of Performance Is

question 74

Multiple Choice

A limitation of ROI as a measure of performance is that

• A)it is a single comprehensive figure examining only one facet of the firm.
• B)it provides disincentive to use existing assets efficiently.
• C)it provides a disincentive to acquire new assets.
• D)it is very sensitive to depreciation policy.
• E)it does not provide the basis for common comparison.

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Definitions:

Quantity Demanded

The sum total of a good or service consumers are ready and able to buy at a certain price point.

Movement Along

Describes the change in quantity demanded or supplied of a good in response to a change in price, as shown on a graph.

Demand Curve

Graphical representation showing how the quantity demanded of a commodity varies with changes in its price.

Inferior Good

A type of good for which demand decreases when consumer income rises, unlike normal goods where demand increases with rising income.