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Which of the following is not a limitation of return on investment?

A. Use of ROI may lead to goal incongruence.
B. ROI is a lagging indicator of financial performance.
C. ROI evaluates the short-term.
D. ROI is a commonly used measure for financial performance.

1 Answer

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Answer: D. ROI is a commonly used measure for financial performance.

Step-by-step explanation:

Return on investment is simply a ratio that exists between the net profit and the cost of investment. It should be noted that a high return on investment simply means that the gain on an investment compares favourably to the cost incurred for the investment. Return on investment is used to determine an investment's efficiency.

Of the options given, the one that is not a limitation of return on investment is ROI is a commonly used measure for financial performance. This is an advantage of using ROI.

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