Which of the Following Is Not a Criticism of Using

question 52

Multiple Choice

Which of the following is not a criticism of using return on investment (ROI) for divisional performance evaluation?

• A) ROI may not capture and reflect value creation in the "new economy."
• B) ROI does not take into consideration the amount of capital invested in the division whose performance is being evaluated.
• C) The ROI metric has a short-term focus/orientation.
• D) ROI fails to capture broader elements of "performance," beyond financial performance.
• E) There is a disconnect between models used for the analysis of long-term capital investment projects and subsequent evaluation of the financial results of those projects using ROI.

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Definitions:

R-chart

A control chart used for monitoring the range of variability of a process over a period of time.

Dispersion

The measure of how spread out or scattered values are in a data set, indicating the variability or inconsistency in the data.

Standard Deviation

A statistical measure of the dispersion or variation in a set of values, indicating how much the values differ from the average.

Sampling Distribution

The probability distribution of a given statistic based on a random sample, often used to make inferences about the population.