Managerial Performance Can Be Measured in Various Ways, Including Return

question 87

Multiple Choice

Managerial performance can be measured in various ways, including return on investment (ROI) and residual income (RI) . A good reason for using RI rather than ROI is:

• A) RI can be computed without regard to identifying an investment base.
• B) Goal congruence is more likely to be promoted by using RI.
• C) RI is well understood and often used and discussed in the financial press.
• D) ROI does not take into consideration both the asset turnover (AT) ratio and the return-on-sales (ROS) percentage.
• E) An imputed interest rate (minimum rate of return) does not have to be specified.

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Definitions:

Ratification

The act of officially approving or confirming an agreement or action, making it valid and binding.

Implied Ratification

The acceptance or approval of a previously unauthorized act by behaving in a manner that acknowledges the act as authorized.

Express Ratification

Formal approval or confirmation of an act or agreement, usually explicitly and often in writing, making it officially valid.

Misrepresentation

The act of giving a false or misleading statement about a material fact, often leading to a breach of contract.