The direct comparison of the performance of two different investment centres is difficult using residual income because residual income is an absolute measure.

Question

Quizplus · Accepted Answer

Residual income is an absolute measure, meaning it is not adjusted for differences in the size or resources of the investment centres being compared. This can make it difficult to directly compare the performance of two centres with different levels of investment or resources, as higher residual income may simply be the result of greater investment rather than superior performance.

The Direct Comparison of the Performance of Two Different Investment