A Positive Result That Stems from the Use of Return

question 34

Multiple Choice

A positive result that stems from the use of return on investment (ROI) is that it encourages managers to focus on

• A) the relationship among sales, expenses, and investment.
• B) cost efficiency.
• C) operating asset efficiency.
• D) the efficient use of resources in generating income.
• E) All of these.

---

Definitions:

Cumulative Losses

Total losses accumulated over a period, often reflecting a company's financial difficulties or losses in investment value.

Fair-Value Method

An accounting strategy used to measure and report the value of certain assets and liabilities on the basis of their actual or estimated fair market prices.

Fair Value

The income derived from the disposal of an asset or the payment required for the assignment of a liability in an organized exchange with market participants during the evaluation period.

Significant Influence

The power to participate in the financial and operating policy decisions of an investee but not control those policies, typically associated with ownership of 20% to 50% of voting stock.