Return on Investment (ROI), Though Widely Used, Is Subject to Which

question 56

Multiple Choice

Return on Investment (ROI) , though widely used, is subject to which one of the following limitations?

• A) ROI cannot incorporate differences in risk across different divisions.
• B) ROI ignores the amount of capital invested in a division.
• C) ROI may not capture value-creation for firms operating in capital-intensive industries.
• D) ROI may motivate managers to take suboptimal decisions from the standpoint of the organization as a whole.
• E) ROI cannot be used to judge the performance of units of different size.

---

Definitions:

Partners

Individuals who engage in a mutual relationship, either in a personal, business context, or both.

Stay

A continuation or pause in the current state, position, or time.

Intimacy

The feeling of being close and emotionally connected to someone, often involving physical or emotional closeness.

Passion

Intense, driving, or overmastering feeling or conviction towards an activity, object, or concept.