A Company May Prefer to Use Residual Income Over Return

question 94

Multiple Choice

A company may prefer to use residual income over return on investment for performance evaluation because:

• A)return on investment is absolute figure but residual income is a ratio.
• B)residual income is more likely to lead to goal congruence than return on investment.
• C)it is easier to calculate residual income than return on investment.
• D)residual income considers three elements but return on investment considers only two elements.

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Definitions:

Crowdfunding

The act of financing a venture or project by collecting small amounts of money from numerous people, often through an online platform.

Marketing

A method of putting the right product in the right place, at the right price, at the right time.

Level of Interest

The degree of curiosity, concern, or attention someone has in a particular subject or activity.

Kickstarter Campaign

A fundraising event launched on the Kickstarter platform aiming to gather financial support from the public for creative, tech, or innovative projects.