To Partially Eliminate the Problems That Are Associated with the Short-Term

question 25

Multiple Choice

To partially eliminate the problems that are associated with the short-term focus of return on investment, residual income, and EVA, the performance of a division's major investments is commonly evaluated through:

• A) postaudits.
• B) sensitivity analysis.
• C) performance operating plans.
• D) horizontal analysis.
• E) segmented reporting.

---

Definitions:

Punitive Damages

Financial compensation awarded to a plaintiff in a lawsuit, intended to punish the defendant for particularly harmful behavior.

Novation

Novation is the legal process by which an existing contract is replaced with a new contract, involving the same or different parties, where the obligations of the original contract are extinguished and replaced by new obligations.

Exemption Clause

A contractual provision that seeks to limit or exclude one's liability in certain situations, often subject to legal scrutiny for fairness.

Fundamental Breach

A serious violation of a contract that allows the aggrieved party to terminate the agreement and sue for damages.