Question

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: Select one: a. return on investment. b. residual income. c. contribution margin. d. segment margin

Answer 1

Answer:

A. Return on investment.

Explanation:

This is said to be a metric means used to measure profitability ratio, index or performance of an organisation. This why in the case above it was up to the manager to use this simple and direct means to plainly discover their performance in the business dealings at the said time.

It also does not require a new accounting measurement to generate information for calculating ROI.

Its disadvantage can be when investment may have many connotations; example can be as gross book value, net book value, assets including or excluding intangible assets, historical cost of assets, current cost of assets