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:

Basic Style of Life

An Alfred Adler concept referring to an individual’s unique way of achieving personal goals and coping with the challenges of life.

Compensation

A motivation to overcome inferiority, to strive for higher levels of development.

Real-life Example

A specific, actual instance used to illustrate a principle, concept, or situation in the everyday world, making abstract ideas more tangible and understandable.

Basic Anxiety

A pervasive feeling of loneliness and helplessness; the foundation of neurosis.