One Approach to Measuring the Short-Term Financial Performance of a Business

question 51

Multiple Choice

One approach to measuring the short-term financial performance of a business unit considered an investment center is return on investment (ROI) . ROI is expressed as operating income of the investment center:

• A) Divided by the current year's capital expenditures plus cost of capital.
• B) Minus imputed interest charged for the use of invested capital by the investment center.
• C) Divided by fixed assets.
• D) Divided by the assets used by the investment center.
• E) Minus the asset turnover (AT) of the investment center.

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Definitions:

Provincial Tax Brackets

The different rates of tax applied to various levels of income within a specific province, determining how much tax individuals owe based on their income.

Tax Difference

The discrepancy between tax calculated on accounting profit and the tax charged by the tax authorities, leading to deferred tax assets or liabilities.

Cash Flow To Shareholders

The amount of cash a company distributes to its shareholders, typically through dividends and share buybacks.

Free Cash Flow

The amount of cash generated by a business after accounting for operational expenses and capital expenditures.