Question

Managerial performance can be measured in many different ways including return on investment (roi) and residual income. a good reason for using residual income instead of roi is: roi does not take into account both turnover and margin. managers are more likely to accept projects that are beneficial to the company. residual income can be computed without having to measure operating assets. a minimum rate of return does not have to be specified when the residual income approach is used.

Answer 1

Managerial performance can be measured in many different ways including return on investment (ROI) and residual income. a good reason for using residual income instead of ROI is: managers are more likely to accept projects that are beneficial to the company. A company that is seeking to increase ROI should attempt to decrease average operating assets.