A Company May Prefer to Use Residual Income Over Return

question 91

Multiple Choice

A company may prefer to use residual income over return on investment for performance evaluation because ________.

• A)residual income is a ratio but return on investment is an absolute figure
• B)residual income is more likely to lead to goal congruence than return on investment is
• C)residual income is easier to calculate than return on investment
• D)residual income considers three elements but return on investment considers only two elements

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Definitions:

Psychological Test

A standardized measure of a sample of a person's behavior or mental processes used to assess psychological constructs.

Standardized Test

An examination that is administered and scored in a consistent, or "standard," manner across different individuals or groups.

Conscientiousness

A personality trait marked by organization, responsibility, and diligence, influencing one's ability to set and meet goals.

Big Five

A model outlining five broad dimensions of personality traits: openness, conscientiousness, extraversion, agreeableness, and neuroticism.