Identify the criticisms of using ROI (Return on investment) as the only performance measure
What will be an ideal response?
Return on investment provides a systematic method for evaluating a product line or business segment. It is a percent that can be used to compare financial performance across products and/or business segments. ROI can be broken into component parts to further analyze business performance. Criticisms of ROI include: motivating short-term oriented decision making, managers choosing to under invest in products with acceptable ROI's from the firm's perspective, difficulty in matching invested capital with sales and operating earnings, focusing only on financial measures, and ignoring other important components of the value chain.
You might also like to view...
Members of a joint venture have ____ implied and apparent authority than the partners in a partnership.
Fill in the blank(s) with the appropriate word(s).
Assume a corporation underestimated its income tax liability for the year by $4,000 . What, if any, end-of-period adjustment is required?
a. The adjusting entry contains a debit to Income Tax Expense for $4,000, and a credit to Cash for $4,000. b. The adjusting entry contains a debit to Income Tax Payable for $4,000, and a credit to Income Tax Expense for $4,000. c. The adjusting entry contains a debit to Income Tax Expense for $4,000, and a credit to Income Tax Payable for $4,000. d. The adjusting entry contains a debit to Accounts Payable for $4,000, and a credit to Cash for $4,000. e. No adjustment is required.