A Problem with Using Residual Income Is That a Corporation

question 36

Multiple Choice

A problem with using residual income is that a corporation with a:

• A)high investment turnover ratio always has a higher residual income than a corporation with a smaller investment turnover ratio
• B)high return on sales always has a higher residual income than a corporation with a smaller return on sales
• C)larger dollar amount of assets is likely to have a higher residual income than a corporation with a smaller dollar amount of assets
• D)None of these answers is correct.

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Definitions:

Distinctive

Having unique or distinguishing characteristics that set something or someone apart from others.

Unusual

Anything that is not common, ordinary, or expected; deviating from what is typical or normal.

Stereotype Inconsistent

Information or behavior that contradicts common stereotypes or generalizations about a group.

Prototype

An early sample or model of a product used to test a concept or process or to act as a thing to be replicated or learned from.