1. What is a disadvantage of a unit-based pool for bonuses?

A) Provides the incentive for individual managers not to cooperate with other units.

B) It is difficult to calculate for each unit at the end of the period.

C) It leads to unethical behavior in every unit of the company.

D) Provides incentive to managers of economically weaker firms.

E) Effort of the overall firm is awarded instead of individual effort.

2. When strategic performance measures or critical success factors are used to determine bonus compensation, the bonus will usually depend either on the amount of improvement in the measure or on:

A) Maintaining the current level.

B) Achieving a predetermined goal.

C) Quality of work completed.

D) Intensity of effort expended.

E) Exceeding expectations.

3. The receivables turnover ratio is a measure of:

A) Asset value.

B) Leverage.

C) Sales performance.

D) Profitability.

E) Liquidity.