Asked by Dathan Trejo on Jul 26, 2024
Verified
An advantage of using return on investment (ROI) to evaluate performance is that it encourages the manager to reduce the investment in operating assets as well as increase net operating income.
Return On Investment
A measure of the profitability of an investment relative to its costs, commonly expressed as a percentage.
Operating Assets
Assets used by a company to generate revenue, typically including property, plant, and equipment, but excluding investments and inventories.
Net Operating Income
The profit generated from a company's everyday business operations, indicating how much revenue exceeds both operating costs and overhead.
- Discover the usage and outcomes of return on investment (ROI) in the evaluation of managerial performance.
Verified Answer
Learning Objectives
- Discover the usage and outcomes of return on investment (ROI) in the evaluation of managerial performance.
Related questions
If a Company Contains a Number of Investment Centers of ...
Which of the Following Will Not Result in an Increase ...
All Other Things the Same, an Increase in Unit Sales ...
Suppose a Company Evaluates Divisional Performance Using Both Return on ...
By Using the Return on Investment as a Divisional Performance ...