ZIL Inc. operates two divisions, which are treated as investment centres. Data for each division for Year
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The companys required rate of return is 12%. The president wishes to evaluate the performance of these divisions and is not sure whether to use return on investment (ROI) or residual income (RI) as the performance measure. Which division performed better, based on the ROI and RI performance measures?
a. Division A because its ROI and RI are higher than those of Division B
b. Division A because its RI is higher than that of Division B
c. Division B because its ROI is higher than that of Division A
d. Division B because its ROI and RI are higher than those of Division A
e. None of the above
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Related Book For
Cost Management Measuring, Monitoring And Motivating Performance
ISBN: 1601
3rd Canadian Edition
Authors: Leslie G. Eldenburg, Susan K. Wolcott, Liang Hsuan Chen, Gail Cook
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