The Growth Component Measures the Increase in Revenues Minus the Increase

question 30

True/False

The growth component measures the increase in revenues minus the increase in costs from selling more units of a product.

---

Definitions:

Investment Center Performance

The evaluation of a unit within a company by measuring its profitability and the return on assets it controls.

Controlling Investment

A significant ownership stake in a company that grants the investor the power to influence or direct the company's decisions.

Residual Income

The income that an individual or company retains after all expenses and costs, including capital costs, have been deducted.

Investment Turnover

A measure of a company's efficiency in using its assets to generate sales or revenue, calculated by dividing total sales by average invested assets.