One of the Key Drawbacks of Using Financial KPIs Like

question 138

Multiple Choice

One of the key drawbacks of using financial KPIs like ROI and EVA is that:

• A) they are difficult and complex to calculate.
• B) they change from period to period.
• C) they cannot be readily compared to other companies.
• D) they focus only on the short term.

---

Definitions:

FIFO Method

A inventory valuation method where the first items produced or acquired are sold or used first.

Work in Process Inventory

Products that are currently under production but have not yet reached completion.

Weighted-Average Method

An inventory costing method that assigns cost based on the average cost of goods available for sale during the period.

FIFO Method

An inventory valuation method that assumes the first items placed into inventory are the first sold.