When Using Financial Performance Measures,which of the Following Statements Is

question 217

Multiple Choice

When using financial performance measures,which of the following statements is incorrect?

• A) Most companies use a weighted-average to determine the amount of average assets for ROI calculations.
• B) Average total assets are used for both ROI and RI computations.
• C) The limitations of financial performance measures reinforce the importance of the balanced scorecard.
• D) In general, calculating ROI based on the net book value of assets gives managers an incentive to continue using old, outdated equipment because its low net book value results in a higher ROI.

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Definitions:

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