1. What are three basic approaches to improving return on investment? Assume any business and explain how these approaches help to improve ROI.
2. What is meant by residual income?
3. In what ways can the use of ROI as a performance measure for investment centres lead to bad decisions? How does the residual income approach overcome this problem?
4. What is meant by transfer price, and why are transfer prices needed?
5. Explain the balance scorecard with an example.