Indicate Whether Each of the Following Statements About Return on Investment

question 32

Short Answer

Indicate whether each of the following statements about return on investment is true or false.
_____ a) Return on investment for a division is calculated by dividing net income by total assets.
_____ b) Using book value as the valuation base for calculating return on investment can distort ROI and cause motivational problems among managers.
_____ c) Using return on investment to make direct comparisons among organizational segments can result in inequities and motivational problems.
_____ d) Return on investment could be calculated based on historical cost or replacement cost for a division's assets.
_____ e) Return on investment can be calculated by dividing margin by turnover.

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Definitions:

Experimental Group

The participants in an experiment who receive the drug or other treatment under study—that is, those who are exposed to the change that the independent variable represents.

Placebo Effect

A phenomenon in which a person experiences a physiological or psychological improvement after being given a treatment with no therapeutic value.

Anxiety Disorder

A category of mental health diagnoses that lead to excessive nervousness, fear, apprehension, and worry.

Independent Variable

The variable in an experiment that is manipulated to see if it causes an effect on some other variable.