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:

Quality Analysis Report

A document detailing the outcome of a quality assessment process, highlighting strengths, weaknesses, and recommendations for improvements.

Defect Rate

The frequency at which errors or imperfections occur in a product, process, or service, typically expressed as a proportion of the total output.

Feedback Source

The origin, either a person or system, from which feedback is received.

Counseling Objective

Refers to the goals set within a therapeutic context aiming to guide the client towards resolution or improvement of their issues.