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D) In general, calculating ROI based on the net book value of assets gives managers an incentive to continue using old, outdated equipment because its low net book value results in a higher ROI.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:

Equity Account

An account that represents the owner's equity or interest in a company, usually comprising investments made by the shareholders and retained earnings.

Compensation Package

The total remuneration, including salary, bonuses, benefits, and any other financial rewards, provided to an employee.

Proxy Fight

A battle for control of a company where opposing sides attempt to win the votes of shareholders to achieve a particular outcome during the company's annual meeting.

Takeover Candidate

A company that appears attractive for acquisition by another firm due to its assets, financial performance, or market position.