A Disadvantage of Evaluating Managers' Performance Based on ROI Is

question 37

Essay

A disadvantage of evaluating managers' performance based on ROI is that it can lead to undesirable managerial actions.Residual income can overcome many of the problems of ROI.
a.Define residual income and explain how it is calculated.
b.What are the shortcomings of residual income? Give an example of when ROI is a better measure than residual income.

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Definitions:

Key Concepts

Fundamental ideas or principles that are central to understanding a topic or subject area.

Test Anxiety

Excessive worry, nervousness, or fear of negative performance outcomes before or during an exam, which can impair the ability to perform well.

Memory Strategies

Approaches and techniques used to enhance and improve the ability to store, retain, and recall information.

Note Cards

Small cards used for jotting down important information for study, speeches, or keeping track of tasks and appointments.