Which of the Following Is NOT a Reason for Evaluating

question 4

Multiple Choice

Which of the following is NOT a reason for evaluating subunits over a multi-year time horizon?

• A)Benefits of actions taken in the current period may not show up in a short-term performance measure.
• B)Managers may curtail R & D or plant maintenance in order to increase short-term results.
• C)Investments may actually decrease ROI and or RI in the short-term.
• D)The NPV of the cash flows over the life of an investment equals [total assets ÷ ROI].
• E)Investments may actually decrease ROI and or RI in the short-term, and benefits of actions taken in the current period may not show up in a short-term performance measure.

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Definitions:

Operating Profit

The profit earned from a firm's core business operations, excluding deductions of interest and tax.

Markdown

A reduction from the original or retail price of a product or service, often used to stimulate sales or clear inventory.

Real Estate Commission

The fee paid to a real estate agent or broker for their services, usually a percentage of the property's sale price.

Trade Discount

A reduction in the listed price of a good or service offered by a vendor to buyers in the same trade.