Which of the following statements is most correct about Return on Investment,Economic Value Added,and Residual Income?
A)ROI was developed in response to criticisms levied against EVA.
B)RI is a refinement of the EVA measure.
C)ROI is a refinement of the RI measure.
D)EVA and RI were developed in response to criticisms levied against ROI.

Question

Quizplus · Accepted Answer

ROI has been a popular measure of financial performance for many years, but it has been criticized for not adequately accounting for the cost of capital. EVA and RI were developed in response to these criticisms, with EVA taking into account both the cost of capital and the opportunity cost of capital, and RI incorporating the cost of capital into its calculations. Therefore, D is the correct answer.

Which of the Following Statements Is Most Correct About Return