Which of the Following Is an Advantage of the ROI

question 61

Multiple Choice

Which of the following is an advantage of the ROI performance measure?

• A)It encourages managers to focus on the relationship among revenues, expenses, and investment.
• B)It discourages managers from investing in projects that would decrease divisional ROI but increase the profitability of the company as a whole.
• C)It encourages managers to focus on the short run at the expense of the long run.
• D)It produces a narrow focus on divisional profitability at the expense of the profitability of the overall firm.

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Definitions:

Products

Goods or services offered by a business or manufacturer, created to fulfill the needs and desires of consumers.

Objectives

Targets or goals that an individual, group, or organization aims to achieve.

Employee Motivation

The level of commitment, drive, and energy that a company's workers bring to their jobs in order to contribute to the organization's success.

Employee Stock Ownership Plan

A program that gives employees the opportunity to buy shares in the company they work for, often at a discounted price.