What Disadvantage Is There in Using ROI And/or RI as Performance

question 149

Multiple Choice

What disadvantage is there in using ROI and/or RI as performance measures?

• A)A manager's bonus will decrease when ROI decreases.
• B)ROI may decrease when business expands if income does not increase in line with the new investment.
• C)RI and ROI are both single-period measures.
• D)RI is measured in absolute dollars but ROI is in percentages.
• E)Imputed costs that are deducted in the RI calculation, are not recognized in accrual accounting, and are therefore not included in the operating figure used in calculating ROI.

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