The Primary Limitation of Using Economic Value Added (EVA®) to Evaluate

question 116

Multiple Choice

The primary limitation of using Economic Value Added (EVA®) to evaluate the financial performance of investment centers is:

• A) Complexity of the calculation.
• B) Dysfunctional long-term investment decisions that can be motivated by focusing on EVA®.
• C) Failure to include a measure of invested capital.
• D) Inability to use EVA® to benchmark against competitor organizations.
• E) Inability to align managerial incentives with ownership interests.

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Definitions:

Internet Of Things

A network of physical objects embedded with sensors, software, or other technologies to connect and exchange data with other devices and systems over the internet.

Connectivity-Enabled Electronics

Electronic devices that are capable of connecting to the internet or other devices, enabling data exchange and remote control.

Technological Breakthroughs

Significant advancements or innovations in technology that can lead to new products or more efficient processes.

Green Technologies

Innovative technologies that are environmentally friendly, focusing on energy efficiency, reducing pollution, and conserving natural resources.