XYZ INC Has Several Divisions and the One Managed by Dr

question 16

Multiple Choice

XYZ INC has several divisions and the one managed by Dr. Donaldson has asset base of $4 million and earnings after taxes is $2 million. A new project would earn $2 million per year on an investment of $3 million. If the new project is on, Mr. Donaldson's bonus should not be based on:

• A) EVA.
• B) ROA.
• C) Sales.
• D) Accounting profits.
• E) Cash flows.

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Definitions:

Job Knowledge

The understanding and expertise a person has regarding the tasks, processes, and responsibilities of a specific job.

People-Building Skills

The ability to teach, counsel, and otherwise develop others to higher levels of performance; a quality of leadership desired by followers. Developing others is a leadership function viewed by many leaders as the most rewarding of their tasks.

Extraversion

A personality trait characterized by outgoingness, high energy, and sociability, inclined towards seeking stimulation in the company of others.

Organizational Politics

The complex social interactions, strategies, and power plays individuals use within organizations to gain advantage or achieve specific goals.