Performance measurement in companies has traditionally been based on feedback on the budget, expressed in financial terms.There is now much discussion about alternative methods of performance measurement to ensure that a company achieves its overall goals.

Required:

1.Comment on the effectiveness of the use of return on investment (ROI) and residual income (RI) as performance indicators, showing under what circumstances a company may use these.

2.Discuss why it is preferable to distinguish between managerial and economic performance.