Asked by Allie Andrews on Jun 17, 2024
Verified
Some investment opportunities that should be accepted from the viewpoint of the entire company may be rejected by a manager who is evaluated on the basis of:
A) return on investment.
B) residual income.
C) contribution margin.
D) segment margin.
Residual Income
The amount of income that an entity has after all costs and expenses, including the cost of capital, have been deducted.
- Analyze the effect of investing decisions on organizational financial performance indicators.
Verified Answer
AR
Adrian RickettsJun 21, 2024
Final Answer :
A
Explanation :
A manager who is evaluated on the basis of return on investment may reject an investment opportunity that benefits the entire company if it does not meet their specific ROI targets or criteria. This narrow focus can result in the manager missing out on potentially profitable investments that would benefit the company as a whole.
Learning Objectives
- Analyze the effect of investing decisions on organizational financial performance indicators.