Suppose a Company Evaluates Divisional Performance Using Both ROI and Residual

question 102

True/False

Suppose a company evaluates divisional performance using both ROI and residual income. The company's minimum required rate of return for the purposes of residual income calculations is 12%. If a division has a residual income of $6,000, then its ROI is greater than 12%.

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Definitions:

Preconventional

The first level of Kohlberg's stages of moral development, where moral reasoning is based primarily on consequences of actions and external rewards and punishments.

Piagetian Period

Stages of cognitive development identified by psychologist Jean Piaget, through which children progress as they grow older.

Preconventional Morality

The first level in Kohlberg's stages of moral development, where behavior is driven by the desire to avoid punishment or gain reward.

Sensorimotor Period

The first stage of Jean Piaget's theory of cognitive development, occurring from birth to approximately two years of age, where an infant's knowledge of the world is limited to their sensory perceptions and motor activities.